Question

San Ysidro Company manufactures hiking equipment. The company’s administrative and manufacturing operations share the company’s only building. Eighty percent of the building is used for manufacturing and the remainder is used for administrative activities. Indirect labor is 8 percent of direct labor.

The cost accountant at San Ysidro has compiled the following information for the year ended December 31.
  

Administrative salaries	$	178,400
Attorney fees to settle zoning dispute		28,700
Building depreciation (manufacturing portion only)		226,600
Cost of goods manufactured		3,555,400
Direct materials inventory, December 31		300,300
Direct materials purchased during the year		1,270,000
Direct materials used		1,339,000
Distribution costs		5,200
Finished goods inventory, January 1		284,000
Finished goods inventory, December 31		314,000
Insurance (on plant machinery)		68,700
Maintenance (on plant machinery)		43,700
Marketing costs		126,800
Other plant costs		111,400
Plant utilities		128,600
Sales revenue		5,796,000
Taxes on manufacturing property		48,600
Total (direct and indirect) labor		1,587,600
Work-in-process inventory, January 1		87,500
Work-in-process inventory, December 31		86,300

  

Required:

Prepare a cost of goods manufactured and sold statement and an income statement.

Can you please do it step by step. I am having trouble figuring out the beginning direct materials inventory, January 1

Answer 1

San Ysidro Company
Cost of goods Manufactured and sold statement
For the Year ending 31st December
Particulars	Amount in Dollar	Amount in Dollar	Amount in Dollar
Work-in-process,January 1st			87,500
Manufacturing cost:
Direct Materials:
Direct materials inventory January 1	369300
Direct material purchased	1,270,000
Direct material usable for production	1639300
Less Direct materials Inventory Dec-31st	300,300
Material Used		1,339,000
Direct labour		1460592
Manufacturing Overhead :
Indirect labour	127008
Plant utilities	128,600
Buiding Depreciation	226,600
Other Plant costs	111,400
Maintenance on plant machinery	43,700
Insurance on Plant machinery	68,700
Taxes on manufacturing Property	48,600
Total overhead		754608
Total manufacturing cost			3554200
Total cost of work-in- process during the year			3641700
Less Work-in -process December 31st			86,300
Cost of goods manufactured this year			3555400
Add finished goods,January 1st			284,000
Cost of goods available for sale			3839400
Less finished goods,december 31st			314,000
Cost of Goods sold (to Income statement)			3525400

San Ysidro Company
Income Statement
For the Year ended December 31st
Particulars	Amount in Dollar	Amount in Dollar
Sales revenue		5,796,000
Less cost of goods sold		3525400
Gross margin		2270600
Adminstrative salaries	178,400
Attorney fees	28,700
Buiding depreciation
Distribution cost	5,200
marketing cost	126,800
Total Operating Cost		339100

Operating Profit

1931500