Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

	On Company		Off Company
Materials inventory, December 1	$74,790		$99,470
Materials inventory, December 31	(a)		112,400
Materials purchased	189,970		(a)
Cost of direct materials used in production	200,440		(b)
Direct labor	281,960		223,810
Factory overhead	87,500		111,410
Total manufacturing costs incurred in December	(b)		643,570
Total manufacturing costs	713,500		883,290
Work in process inventory, December 1	143,600		239,720
Work in process inventory, December 31	121,160		(c)
Cost of goods manufactured	(c)		637,600
Finished goods inventory, December 1	126,400		111,410
Finished goods inventory, December 31	132,380		(d)
Sales	1,102,400		994,700
Cost of goods sold	(d)		643,570
Gross profit	(e)		(e)
Operating expenses	143,600		(f)
Net income	(f)		220,820

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
			$
Direct materials:
	$
	$
		$
Total manufacturing costs incurred during December
Total manufacturing costs			$
			$

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
		$
Cost of goods sold:
	$
	$
		$
		$

Answer 1

1.

letters	on company	off company
a	64320	321280
b	569900	308350
c	735940	485410
d	729960	105440
e	372440	351130
f	228840	130310

working note:-

particulars	on company($)	off company($)
material inventory,december 1	74790	99470
material inventory december 31	64320	112400
material purchased	189970	321280
cost of direct material used in production	200440	308350
direct labour	281960	223810
factory overhead	87500	111410
total manufacturing cost in december	569900	643570
total manufacturing costs	713500	883290
work in process inventory,december 1	143600	239720
work in process inventory,december 31	121160	485410
cost of goods manufactured	735940	637600
finished goods inventory,december 1	126400	111410
finished goods inventory,december 31	132380	105440
sales	1102400	994700
cost of goods sold	729960	643570
gross profit	372440	351130
operating expenses	143600	130310
net income	228840	220820

2) cost of goods manufactured for on comapny

particulars	on company($)
cost of direct material used in production	200440
add:-direct labour	281960
add:-factory overhead	87500
total manufacturing cost in december	569900
total manufacturing costs	713500
add:-work in process inventory,december 1	143600
less:-work in process inventory,december 31	121160
cost of goods manufactured	735940

3. On Company's income statement for December.

particulars		on company($)
sales		1102400
less:-cost of goods sold
cost of goods manufactured	735940
add:-finished goods inventory,december 1	126400
less:-finished goods inventory,december 31	132380	729960
gross profit		372440
less:-operating expenses		143600
net income		228840

working notes:-

1) cost of material used in production=material inventory on december 1+purchases-materail inventory on december 31

2) total manufacturing cost in december =cost of material used in production+direct labour+factory overhead

3) cost of goods manufactured=total manufacturing cost+work in process inventory on december 1-work in process inventory on december 31

4) cost of goods sold=cost of goods manufactured+finished goods inventory on december 1-finished goods inventory on december 31

5) gross profit=sales-cost of goods sold

6) net income=gross profit-operating expenses