Question

The following data refer to Laredo Luggage Company for the year 20x2:

Sales revenue	$	1,000,000
Work-in-process inventory, December 31		30,000
Work-in-process inventory, January 1		36,000
Selling and administrative expenses		150,000
Income tax expense		80,000
Purchases of raw material		160,000
Raw-material inventory, December 31		25,000
Raw-material inventory, January 1		40,000
Direct labor		200,000
Utilities: plant		40,000
Depreciation: plant and equipment		50,000
Finished-goods inventory, December 31		50,000
Finished-goods inventory, January 1		10,000
Indirect material used		10,000
Indirect labor		9,000
Other manufacturing overhead		60,000

41.

Required information

1.	Prepare Laredo Luggage’s schedule of cost of goods manufactured for the year.

       

rev: 06_08_2015_QC_CS-17166

42.

Required information

2.	Prepare Laredo Luggage’s schedule of cost of goods sold for the year.

     

43.

Required information

3.	Prepare Laredo Luggage’s income statement for the year.

       

Answer 1

	Schedule of cost of goods manufactured
	Direct Material:
	Raw materials inventory,Jan 1					40,000
	Add:Purchase of raw materials					160,000
	Raw materials available for use					200,000
	less:Raw materials inventory,dec 31					25,000
	Raw material used						175,000
	Direct labor						200,000
	Manufacturing overhead
	Indirect materials					10,000
	Indirect labor					9,000
	Utilities plant					40,000
	Depreciation plant and Equipment					50,000
	other manufacturing overhead					60,000
	total manufacturing overhead						169,000
	total manufacturing costs						544,000
	Add:Work in process inventory,Jan 1						36,000
							580,000
	less:Work in process inventory,dec 31						30,000
	cost of goods manufactured						550,000
	Schedule of cost of goods sold
	finished goods inventory,jan 1						10,000
	Add cost of goods manufactured						550,000
	cost of goods available for sale						560,000
	less finished goods inventory,Dec 31						50,000
	cost of goods sold						510,000
	Income statement
	Sales revenue						1,000,000
	less cost of goods sold						510,000
	Gross margin						490,000
	Selling and administrative expense						150,000
	income before taxes						340,000
	income tax expense						80,000
	net income						260,000