Question

XYZ Inc. manufacturing costs based on raw materials used, direct labor, and manufacturing overhead totaled $1.5 million? Beginning and ending work in process inventory‘s were 60,000 and 90,000 respectively XYZ‘s balance sheet also revealed respective beginning and ending finished good inventories of $250,000 and $180,000. Based on the above how much would ABC disclose as cost of goods manufactured and cost of goods sold? How much would it be NI after-tax if sales are $2 million other operating expenses are $60,000 and tax rate is 35%?

Answer 1

Total manufacture cost	1,500,000
Add: work in process inventory at the beginning	60,000
Total cost to be accounted for	1,560,000
Less: work in process inventory at ending	90,000
Cost of goods manufactured	1,470,000
Beginning finished goods inventory	250,000
Add: Cost of goods manufactured	1,470,000
Cost of goods available for sale	1,720,000
Less: Ending finished goods inventory	180,000
Cost of goods sold	1,540,000

XYZ Inc.
Income statement
For the period ended
sales revenue	2,000,000
Less: Cost of Goods Sold	1,540,000
Gross Profit	460,000
Less: Operating expenses	60,000
Income before tax	400,000
Less: Tax @ 35% (400000*35%)	140,000
Net income	260,000

Summary of answer
Cost of goods manufactured	1,470,000
Cost of goods sold	1,540,000
Net income	260,000