Question

Chaos Manufacturing had the following financial information for the year ended December 31 2018: Inventory Balances: Beginning Ending Work in Progress $ 90,000 $ 80,000 Finished Goods $ 77,000 $ 67,000 Raw Materials $ 10,000 $ 30,000 During the year, the budgeted and actual costs were as follows: Note Actual Raw Materials 1 290,000 Labour 2 518,000 Depreciation Factory Equipment 72,000 Depreciation Office Equipment 24,000 Building Rent 3 100,000 Maintenance – Factory Equipment 40,000 Utilities – Electrical 4 180,000 Utilities - Gas 5 90,000 Utilities - Telecom 6 22,000 Sales Commissions 30,000 Advertising 20,000 Shipping 7 16,000 Total 1,402,000 Sales for the year were $1,500,000 Note 1 – Raw material 90% of raw materials are traced directly to specific jobs, and the remaining 10% of raw materials are used throughout the production process and not traced. $290,000 in materials was purchased in the year. Note 2 – Labour Direct Labour $270,000 + Factory Salaries $85,000 + Head Office Salaries $163,000 = $518,000 Note 3 – Building Rent The building is shared between the factory and the administrative office. 68% of the building is related to the factory, and the remaining 32% is related to the administrative office. Note 4 – Utilities Electrical 90% of these costs are related to the factory, and 10% of these costs are related to the administrative office. Note 5 – Utilities - Gas All of the Gas is used to heat production equipment. Note 6 – Utilities - Telecom All of the Telecom costs are for sales people. Note 7 – Shipping All of the shipping costs are to ship finished goods to customers. Required: Prepare an income statement. You may include a schedule of Cost of Goods Manufactured and Cost of Goods Sold as separate schedule or as part of the Income Statement.

Answer 1