Answer and Explanation:
The Preparation of cost of goods manufactured is shown below:-
<u>Statement of Cost of Good Manufactured
</u>
<u>Particulars Amount</u>
Direct Material
Beginning Inventory a $40,000
Purchases b $290,000
Direct material available $330,000
(c = a + b)
Ending direct material
inventory d $10,000
Direct Material used $320,000
(e = c - d)
Direct Labor $398,000
($683,000 - $285,000 - $320,000)
Factory Overhead $285,000
Total Manufacturing Cost $683,000
Add: Beginning WIP Inventory $42,000
($690,000 + $35,000 - $683,000)
Less: Ending WIP Inventory $35,000
Cost of goods manufactured $690,000
b and c The Preparation of schedule of cost of goods sold and income statement for the year is prepared below:-
<u>Schedule of cost of goods sold</u>
<u>Income statement for the year</u>
<u>Particulars Amount</u>
Sales $915,000
($270,000 + $645,000)
Cost of goods sold
Beginning inventory of
finished product $50,000
Cost of goods manufactured $690,000
Cost of goods available
for sales $740,000
Less:Ending finished good
inventory $80,000
($740,000 - $660,000)
Cost of goods sold
(Unadjusted) $660,000
Over-applied Overhead $15,000
($285,000 - $270,000)
Cost of goods sold (Adjusted) $645,000
($660,000 - $15,000)
Gross profit $270,000
($30,000 + $100,000 + $140,000)
Less: Selling & Administrative Expenses
Selling Expenses $140,000
Administrative expenses $100,000 $240,000
Operating income $30,000
