Question

 Income statement Crowley Inc., submits the following data for September 

Direct labor cost, $30,000 

Cost of goods sold, $111,000 

Factory overhead is applied at the rate of 150% of direct labor cost 

Inventory accounts showed these beginning and ending balances: 

September 1 September 30 

Finished goods……………….... $15,000 $17,500 

Work in process……………….. 9,600 13,000 

Materials…………………………. 7,000 7,400 

Other data: 

Marketing expenses………………………………………………………………………… $ 14,100

General and administrative expenses……………………………………………… 22,000 

Sales for the month………………………………………………………………………… 182,000 

Required:

An income statement with schedule showing cost of goods manufactured and sold

Answer 1

The detailed answer for the above question is provided below:

Cost  of  goods  sold  =  Material consumed  + labour  cost  +  Factory  overheads  +  opening work in process  - Clsoing  work in process  +  opening finished  goods  -  closing  finished  goods 

 

materials  consumed  =  opening  materials  +  purchases  -  closing  materials 

Let  purchases  =  K  

 

Factory  overheads  =  150%  * 30000  =  45000 

 

111000  =  7000  +  K - 7400  +  30000  +  45000  + 9600 - 13000  +  15000 - 17500 

 

K  =  Materials  purchased  =  42300 

 

1)  Materials  consumed  =  7000  +  42300 - 13000  = 36300

 

2)  Factory  overheads  =  150%  * 30000  =  45000 

 

 

 

 

INCOME STATEMENT 

Particulars	Amount
materials  consumed	41900
labour cost	30000
PRIME COST	71900
Add Factory  overheads	45000
Add  opening  work in process	9600
less  closing  work in process	( 13000)
FACTORY  COST	113500
Add  opening stock	15000
Less closing  stock	(17500)
COST  OF  GOODS SOLD	111000
Add general and marketing  expenses	36100
COST  OF  SALES	147100
SALES	182000
PROFIT	34900