Question

Northern Illinois Manufacturing provides products and services needed to irrigate farms, parks, commercial properties, and private homes. It has a centrally located factory that manufactures the products it markets to retail outlets across the nation. The month of November has just ended and Northern Illinois needs to generate a cost of goods manufactured and cost of goods sold for its income statement. The application of overhead is based on direct labor hours. At the beginning of the year, the company estimated direct labor hours of 40,000 and total estimated overhead of $2,000,000. During the month of November, the number of direct labor hours was 3,275. The following additional data for November is provided:

Indirect Materials in Manufacturing Overhead
$ 17,500
Advertising Expense 54,000 Depreciation – Factory Equipment 16,800 Depreciation – Office Equipment 2,400 Direct Labor 82,000 Factory Supplies 10,800 Factory Utilities 10,200 Finished Goods Inventory – November 30 68,800 Finished Goods Inventory – October 31 72,550 Indirect Labor 48,000 Office Supplies Expense 1,600 Other Administrative Expenses 72,000 Raw Materials Inventory – November 30 52,700 Raw Materials Inventory – October 31 38,000 Raw Materials Purchases 184,500 Rent – Factory Equipment 47,000 Repairs – Factory Equipment 4,500 Salaries 325,000 Sales 1,350,000 Sales Commissions 40,500 Work In Process Inventory – November 30 52,700 Work In Process Inventory – October 31 42,000 Property Tax on Factory 5,500


Instructions: From the above information, prepare a cost of goods manufactured schedule, cost of goods sold schedule, and an income statement to the net operating income.

Answer 1

Schedule of Cost of Goods Manufactured For The Month ended November 30 Direct Material :- Beginning Inventory of Raw Material Oct 31 $ 38,000 Raw Material purchased $ 184,500 Raw material Available for use $ 222,500 Ending Inventory of Raw Material Nov 30 $ 52,700 Direct Material used in production Add less 169,800 Direct Labor 82,000 Manufacturing Overhead: Indirect Material Depreciation-Factory Equipment Factory Supplies Factory Utilities Indirect Labor Rent-Factory Equipment Repair - Factory Property Tax-Factory Total Manufaturing Overhead cost Total Manufacturing cost Beginning Work in Process Oct 31 Total manufacturing cost to account for Ending Work in Process nov 30 Cost of Goods Manufactured $ $ $ $ $ $ $ $ 17,500 16,800 10,800 10,200 48,000 47,000 4,500 5,500 Add 160,300 412,100 42,000 454,100 52,700 401,400 $ less $ Cost of Goods sold For The Month ended November 30 Add Beginning Finished Goods Inventory Oct 31 Cost of Goods Manufactured Cost of goods available for sale Ending Inventory of Finished Goods Nov 30 Cost of Goods Sold $ $ $ $ $ 72,550 401,400 473,950 68,800 405,150 Less $ 1,350,000 405,150 944,850 $ Less Income Statement For The Month ended November 30 Net Sales Cost of Goods Sold Gross Profit Operating Expenses:- Advertising Expense $ 54,000 Depreciation - office equipments $ 2,400 Office Supplies $ 1,600 Salaries $ 325,000 Sales Commision $ 40,500 Other administration exp $ 72,000 Total operating Expense Net Operating Income $ $ 495,500 449,350