Question

16

Required information The following selected account balances are provided for Delray Mfg. Sales $1,302,000 Raw materials inventory, Dec. 31, 2016 41,000 Work in process inventory, Dec. 31, 55,900 2016 Finished goods inventory, Dec. 31, 2016 60,300 Raw materials purchases 160,200 Direct labor 238,000 Factory computer supplies used 18,300 Indirect labor 53,000 Repairs-Factory equipment 5,250 Rent cost of factory building 59,000 Advertising expense 84,000 General and administrative expenses 143,000 Raw materials inventory, Dec. 31, 2017 47,600 Work in process inventory, Dec. 31, 45,400 2017 Finished goods inventory, Dec. 31, 2017 69,500 Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

DELRAY MFG Schedule of Cost of Goods Manufactured For Year Ended December 31, 2017 Direct Materials:      Raw materials inventory, December 31, 2016 $41,000      Add: Raw materials purchases $160,200      Raw materials available for use $201,200      Less: Raw materials inventory, December 31, 2017 $47,600      Direct Materials used $153,600 Direct labor $238,000 Factory Overhead:      Factory computer supplies used $18,300      Indirect labor $53,000      Repairs - factory equipment $5,250      Rent cost of factory building $59,000     Total factory overhead costs $135,550 Total manufacturing costs                       [Direct Materials used + Direct Labor + Total factory overhead costs] $527,150 Add: Work in Process inventory, December 31, 2016 $55,900 Total Cost of work in Process $583,050 Less: work in Process inventory, December 31, 2017 $45,400 Cost of Goods Manufactured $537,650 . . DELRAY MFG Income Statement For the Year Ended December 31, 2017 Sales $1302000 Cost of Goods Sold     Finished goods inventory, December 31, 2016 $60300     Cost of Goods Manufactured            [Refer schedule of Cost of Goods Manufactured] $537650     Cost of Goods available for sale $597950     Less: Finished goods inventory, December 31, 2017 $69500     Cost of Goods sold $528450 Gross profit                                 [Sales - Cost of goods sold = $1302000 - $528450] $773550 Operating Expenses:      Advertising expenses $84000      General and Administrative Expenses $143,000 Total operating expenses $227,000 Operating Income              [773550 - $227000] $546550