Question

Question

The following data pertain to the operations of a manufacturing company for the year 2018

Item Amount (sh)

Sales revenues 1,000,000

Direct materials inventory, Jan 1, 2018 15,000

Direct labour 300,000

Depreciation, plant   60,000

Depreciation, equipment 40,000

Cutting tools used 10,000

Indirect labour 5,000

Factory lighting and power 10,000

Factory supervisor’s salary 50,000

Indirect materials 10,000

Finished goods inventory, Jan 1, 2018 30,000

Work in progress inventory, December 31, 2018 20,000

Office Supplies 10,000

Finished goods inventory, December 31, 2018 40,000

Direct materials inventory, December 31, 2018 25,000

Sales representatives salaries 250,000

Work in progress inventory, Jan 1, 2018 30,000

Purchases of direct materials 110,000

Factory supplies 5,000

Depreciation, administration office 50,000

Required; (a) Prepare a statement of the cost of goods manufactured

(b) Prepare an income statement for the company

Answer 1

	(a) STATEMENT OF THE COST OF GOODS MANUFACTURED
	PARTICULARS	AMOUNT	AMOUNT
	DIRECT MATERIAL INVENTORY
	OPENING	15000
	ADD: PURCHASE	110000
	LESS: CLOSING	-25,000	100000
	DIRECT LABOR		300000
	PRIME COST		400000
	FACTORY OVERHEAD
	DEPRECIATION
	- PLANT	60000
	- EQUIPMENT	40000
	CUTTING TOOLS	10000
	INDIRECT LABOR	5000
	INDIRECT MATERIAL	10000
	FACTORY LIGHTING & POWER	10000
	FACTORY SUPERVISORS SALARY	50000
	FACTORY SUPPLIES	5000
	ADD: OPENING WORK-IN-PROGRESS	30000
	LESS: CLOSING WORK-IN-PROGRESS	-20000	200000
	WORK COST		600000
	ADMINISTRATION OVERHEAD
	OFFICE SUPPLIES	10000
	DEPRECIATION - OFFICE	50000	60000
	COST OF GOODS MANUFACTURED		660000

(b) INCOME STATEMENT PARTICULARS AMOUNT PARTICULARS AMOUNT OPENING INVENTORY SALES 1000000 - DIRECT MATERIAL 15000 - FINISHED GOODS 30000 - WIP 30000 DIRECT LABOR 300000 CLOSING INVENTORY DM PURCHASE 110000 - DIRECT MATERIAL 25000 CUTTING TOOLS 10000 - FINISHED GOODS 40000 FACTORY SUPPLIES 5000 - WIP 20000 FACTORY LIGHTING & POWER 10000 FACTORY SUPERVISOR SALARY 50000 INDIRECT MATERIAL 10000 INDIRECT LABOR 5000 DEPRECIATION - FACTORY PLANT 60000 - FACTORY EQUIPMENT 40000 - OFFICE 50000 OFFICE SUPPLIES 10000 SALES REPRESENTATIVE SALARY 250000 PROFIT 100000 1085000 1085000