Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

	On Company		Off Company
Materials inventory, December 1	$75,790		$102,320
Materials inventory, December 31	(a)		115,620
Materials purchased	192,510		230,220
Cost of direct materials used in production	203,120		(a)
Direct labor	285,730		(b)
Factory overhead	88,670		114,600
Total manufacturing costs incurred in December	(b)		662,010
Total manufacturing costs	723,040		723,040
Work in process inventory, December 1	145,520		246,590
Work in process inventory, December 31	122,780		(c)
Cost of goods manufactured	(c)		655,870
Finished goods inventory, December 1	128,090		114,600
Finished goods inventory, December 31	134,150		(d)
Sales	1,117,140		1,023,200
Cost of goods sold	(d)		662,010
Gross profit	(e)		(e)
Operating expenses	145,520		(f)
Net income	(f)		227,150

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
Work in process inventory, December 1			$
Direct materials:
Materials inventory, December 1	$
Purchases
Cost of materials available for use	$
Materials inventory, December 31
Cost of direct materials used in production		$
Direct labor
Factory overhead
Total manufacturing costs incurred during December
Total manufacturing costs			$
Work in process inventory, December 31
Cost of goods manufactured			$

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
Sales		$
Cost of goods sold:
Finished goods inventory, December 1	$
Cost of goods manufactured
Cost of finished goods available for sale	$
Finished goods inventory, December 31
Cost of goods sold
Gross profit		$
Operating expenses
Net income		$

Answer 1

1)

LETTER	ON COMPANY	OFF COMPANY
a	$ 65,180	$ 216,920
b	$ 577,520	$ 330,490
c	$ 745,780	$ 313,760
d	$ 739,720	$ 108,460
e	$ 377,420	$ 361,190
f	$ 231,900	$ 134,040

ALL EXPLANATION IS GIVEN BELOW :

CALCULATE THE AMOUNTS OF MISSING ITEMS :
ON COMPANY :
A) Material inventory , December 31 :
cost of direct materials used in production = material inventory , December 1 + materials purchased - materials inventory , December 31.
$ 203,120 = $ 75,790 + $ 192,510 -materials inventory , December 31
materials inventory , December 31 = $ 75,790 + $ 192,510 - $ 203,120
materials inventory , December 31 = $ 65,180
B) Total manufacturing costs incurred in December
total manufacturing costs incurred in December = cost of direct materials used in production + direct labor + factory overhead
total manufacturing costs incurred in December = $ 203,120 + 285,730 + $ 88,670
total manufacturing costs incurred in December = $577,520
C) cost of goods manufactured :
cost of goods manufactured = total manufactured costs + work in process inventory , December 1 - work in process inventory , December 31
cost of goods manufactured = $ 723,040 + $ 145,520 - $ 122,780
cost of goods manufactured = $ 745,780
D) Cost of goods sold :
cost of goods sold = finished goods inventory , December 1 + cost of goods manufactured - finished goods inventory , December 31
cost of goods sold = $ 128,090 + $ 745,780 ( see in ( C ) ) - $ 134,150
Cost of goods sold = $ 739,720
E) GROSS PROFIT :
Gross profit = sales - cost of goods sold
Gross profit = $1,117,140 - $ 739,720 ( see in ( d ))
Gross profit = $ 377,420
F) NET INCOME :
Net income = gross profit - operating expenses
net income = $ 377,420 ( see in ( e )) - $ 145,520
net income = $ 231,900

OFF COMPANY :
A) Cost of direct materials used in production :
cost of direct materials used in production = material inventory , December 1 + materials purchased - materials inventory , December 31.
cost of direct materials used in production = $ 102,320 + $ 230,220 - $ 115,620
cost of direct materials used in production = $ 216,920
B) direct labor :
total manufacturing costs incurred in December = cost of direct materials used in production + direct labor + factory overhead
$ 662,010 = $ 216,920 ( see in ( a )) + direct labor + $ 114,600
direct labor = $ 662,010 - $ 216,920 - $ 114,600
direct labor = $ 330,490
C) Work in process inventory December 31 :
cost of goods manufactured = total manufactured costs + work in process inventory , December 1 - work in process inventory , December 31
$ 655,870 = $ 723,040 + $ 246,590 - work in process inventory , December 31
work in process inventory December 31 = $ 723,040 + $ 246,590 - $ 655,870
work in process inventory December 31 = $ 313,760
D) Finished goods inventory , December 31 :
cost of goods sold = finished goods inventory , December 1 + cost of goods manufactured - finished goods inventory , December 31
$ 662,010 = $ 114,600 + $ 655,870 - finished goods inventory December 31
finished goods inventory , December 31 = $ 114,600 + $ 655,870 - $ 662,010
finished goods inventory , December 31 = $ 108,460
E ) GROSS PROFIT:
Gross profit = sales - cost of goods sold
gross profit = $ 1,023,200 - $ 662,010
Gross profit = $ 361,190
F) OPERATING EXPENSES :
Net income =gross profit - operating expenses
$ 227,150 = $ 361,190 ( see in ( e )) - operating expenses
operating expenses = $ 361,190 - $ 227,150
operating expenses = $ 134,040

ON COMPANY
STATEMENT OF COST OF GOODS MANUFACTURED
FOR THE MONTH ENDED DECEMBER 31
Work in process inventory, December 1			$ 145,520
Direct materials :
materials inventory December 1	$ 75,790
add: purchases	$ 192,510
cost of materials available for sale	$ 268,300
less: materials inventory December 31 ( see in ( A ))	( $ 65,180 )
cost of direct materials used in production		$ 203,120
direct labor		$ 285,730
factory overhead		$ 88,670
total manufacturing cost incurred during December			$ 577,520
total manufacturing costs			$ 723,040
less: work in process inventory , December 31			( $122,780 )
cost of goods manufactured			$ 600,260

3)

ON COMPANY
INCOME STATEMENT
FOR THE MONTH ENDED DECEMBER 31
Sales		$ 1,117,140
Less: cost of goods sold
finished goods inventory , December 1	$ 128,090
add: Cost of goods manufactured ( see in ( C ) )	$ 745,780
cost of finished goods available for sale	$ 873,870
less: finished goods inventory , December 31	($ 134,150 )
cost of goods sold		($ 739,720)
gross profit		$ 377,420
less : operating expenses		( $ 145,520 )
net income		$ 231,900