Question

The following selected account balances are provided for Delray Mfg.

Sales	$	1,365,000
Raw materials inventory, beginning		40,000
Work in process inventory, beginning		50,300
Finished goods inventory, beginning		62,600
Raw materials purchases		178,700
Direct labor		226,000
Factory supplies used (indirect materials)		24,700
Indirect labor		47,000
Repairs—Factory equipment		5,250
Rent cost of factory building		54,000
Advertising expense		88,000
General and administrative expenses		134,000
Raw materials inventory, ending		44,800
Work in process inventory, ending		42,000
Finished goods inventory, ending		70,600

Prepare its schedule of cost of goods manufactured for the current year ended December 31.

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

Answer 1

Schedule of Cost of Goods Manufactured
Beginning raw material inventory	40,000
Purchase of raw material	178,700
Total raw materials available	218,700
Ending raw material inventory	-44,800
Raw material used	173,900
Direct labor	226,000
Manufacturing Overheads:
Factory supplies used (indirect materials)	24,700
Indirect labor	47,000
Repairs—Factory equipment	5,250
Rent cost of factory building	54,000
Total Manufacturing Cost	530,850
Beginning work in process inventory	50,300
Ending work in process inventory	-42,000
Cost of goods manufactured	$539,150

Income Statement
Revenues
Sales revenue		1,365,000
Cost of goods sold:
Finished goods inventory beginning	62,600
Cost of goods manufactured	539,150
Cost of goods available for sale	601,750
Finished goods inventory Ending	-70,600
Cost of goods sold		-531,150
Gross profit		833,850
Expenses:
Advertising expense	-88,000
General and administrative expenses	-134,000
Total expenses		-222,000
Net Income		$611,850

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