Question

The following selected account balances are provided for Delray Mfg.

Sales	$	1,193,000
Raw materials inventory, beginning		45,000
Work in process inventory, beginning		51,700
Finished goods inventory, beginning		68,700
Raw materials purchases		160,000
Direct labor		241,000
Factory supplies used (indirect materials)		19,100
Indirect labor		40,000
Repairs—Factory equipment		5,250
Rent cost of factory building		57,000
Advertising expense		109,000
General and administrative expenses		126,000
Raw materials inventory, ending		42,900
Work in process inventory, ending		38,200
Finished goods inventory, ending		69,000

Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

schedule of cost of goods manufactured
Direct materials:
raw material inventory at beginning	45000
add: raw material purchase	160000
raw material available for use	205000
less: raw material inventory at the end	42900
Direct material used	162100
Direct labor	241000
Factory overhead :
factory computer supplies used	19100
indirect labor	40000
repair- factory equipment	5250
rent cost of factory building	57000
total factory overhead	121350
Total manufacturing costs	524450
add: work in process inventory at beginning	51700
total cost of work in process	576150
less: work in process inventory at the end	38200
cost of goods manufactured	537950
Income statement
sales	1193000
cost of goods sold
finished goods inventory at beginning	68700
cost of goods manufactured	537950
cost of goods available for sale	606650
less: finished goods inventory at the end	69000
cost of goods sold	537650
gross profit	655350
operating expenses
advertising expenses	109000
general& administrative expenses	126000
total operating expenses	235000
operating income	420350