Question

The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year:
  

Administrative costs	$	1,653
Building and machine depreciation (75% of this amount is for factory)		800
Building utilities (90% of this amount is for factory)		1,310
Direct labor		835
Direct materials inventory, December 31		16
Direct materials inventory, January 1		10
Direct materials purchases		3,640
Factory supervision		495
Finished goods inventory, December 31		66
Finished goods inventory, January 1		57
Indirect factory labor		918
Indirect materials and supplies		691
Marketing costs		879
Property taxes on building (85% of this amount is for factory)		1,000
Sales revenue		12,945
Work-in-process inventory, December 31		28
Work-in-process inventory, January 1		34

Required:

Prepare an income statement with a supporting cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)

Answer 1

Billings Tools and Die

Income Statement

For last year

Sales Revenue		$ 12,945
Less: Cost of Goods Sold		9,199
Gross Profit		3,746
Selling and Administrative Expenses
Marketing Costs	879
Administrative Costs	1,653
Depreciation Expense	200
Utilities Expense	131
Property Tax Expense	150
Total Selling and Administrative Expenses		3,013
Net Operating Income		$ 733

Billings Tools and Die

Statement of Cost of Goods Sold

For last year

	$	$
Beginning Work in Process Inventory		34
Direct Materials used in production
Beginning direct materials inventory	10
Add: Purchases	3,640
Less: Ending direct materials inventory	(16)	3,634
Direct Labor		835
Manufacturing Overhead
Building and machine depreciation	600
Building utilities	1,179
Factory Supervision	495
Indirect labor	918
Indirect materials and supplies	691
Property taxes on factory building	850	4,733
Total cost of work in process		9,236
Less: Ending work in process inventory		(28)
Cost of Goods Manufactured		9,208
Beginning finished goods inventory		57
Cost of goods available for sale		9,265
Less: Ending finished goods inventory		(66)
Cost of goods sold		$ 9,199