Question

1. Daniels Co. produced 150,000 lamps during the past calendar year. Daniels had 2,500 floor lamps in finished goods inventory at the beginning of the year. At the end of the year, there were 11,500 floor lamps in finished goods inventory. The lamps sell for $50 each. Daniels accounting records provide the following information for the past year:

            

Purchases of direct materials	$1,675,000
Direct materials inventory, January 1	380,000
Direct materials inventory, December 31	327,000
Direct labor	2,000,000
Indirect labor	790,000
Depreciation, factory building	1,100,000
Depreciation, factory equipment	630,000
Property taxes on the factory	65,000
Factory utilities	150,000
Freight in	1,500
Insurance on the factory	200,000
Research and development	120,000
Salary, sales supervisor	85,000
Commissions, salesperson	370,000
General administration	390,000
Work in process inventory, January 1	450,000
Work in process inventory, December 31	750,000
Finished goods inventory, January 1	1007,500
Finished goods inventory, December 31	489,000

Required:

1. Prepare a cost of goods manufactured statement
2. Prepare an income statement
3. Compute the cost of producing one lamp in 2018           

Answer 1

Daniels Co.
Cost of Goods Manufactured
Direct materials inventory, January 1	$380,000
Add: Purchase of direct materials	$1,675,000
Less: Direct materials inventory, December 31	($327,000)
Direct materials used in the production		$1,728,000
Add: Direct labor		$2,000,000
Add: Manufacturing Overheads:
Indirect labor	$790,000
Depreciation, factory building	$1,100,000
Depreciation, factory equipment	$630,000
Property taxes on the factory	$65,000
Factory utilities	$150,000
Freight in	$1,500
Insurance on the factory	$200,000
Total Manufacturing Overheads		$2,936,500
Total Manufacturing Costs		$6,664,500
Add: Work-in Process Inventory, January 1		$450,000
Less: Work-in Process Inventory, December 31		($750,000)
Cost of Goods Manufactured		$6,364,500
Cost of Goods Manufactured		$6,364,500
Add: Finished Goods inventory, January 1		$1,007,500
Less: Finished Goods Inventory, December 31		($489,000)
Cost of Goods Sold		$6,883,000
Daniels Co.
Income Statement
Sales Revenue (141,000 units * $50 each)		$7,050,000
Less: Cost of Goods Sold		($6,883,000)
Gross Profit		$167,000
Less: Operating Expenses:
Research and Development	($120,000)
Salary, sales supervisor	($85,000)
Commissions, salesperson	($370,000)
General administration	($390,000)
Total Operating Expenses		($965,000)
Net Operating Loss		($798,000)
Cost of Goods Manufactured (a)	$6,364,500
Number of units produced (b)	150,000
Cost of producing one lamp (a / b)	$42.43
Working notes for selling units:
Beginning finished goods units	2,500
Add: Units produced during the year	150,000
Less: Ending finished goods units	11,500
Total Units sold	141,000