Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

	On Company		Off Company
Materials inventory, December 1	$87,370		$110,090
Materials inventory, December 31	(a)		124,400
Materials purchased	221,920		247,700
Cost of direct materials used in production	234,150		(a)
Direct labor	329,380		(b)
Factory overhead	102,220		123,300
Total manufacturing costs incurred in December	(b)		712,280
Total manufacturing costs	833,510		833,500
Work in process inventory, December 1	167,750		265,320
Work in process inventory, December 31	141,540		(c)
Cost of goods manufactured	(c)		705,680
Finished goods inventory, December 1	147,660		123,300
Finished goods inventory, December 31	154,640		(d)
Sales	1,287,830		1,100,900
Cost of goods sold	(d)		712,280
Gross profit	(e)		(e)
Operating expenses	167,750		(f)
Net income	(f)		244,400

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
			$
Direct materials:
	$
	$
		$
Total manufacturing costs incurred during December
Total manufacturing costs			$
			$

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
		$
Cost of goods sold:
	$
	$
		$
		$

Answer 1

Answer 1.

On Company:

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
$234,150 = $87,370 + $221,920 - Materials inventory, December 31
Materials inventory, December 31 = $75,140

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
Total manufacturing costs incurred in December = $234,150 + $329,380 + $102,220
Total manufacturing costs incurred in December = $665,750

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
Cost of goods manufactured = $833,500 - $141,540
Cost of goods manufactured = $691,960

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
Cost of goods sold = $147,660 + $691,960 - $154,640
Cost of goods sold = $684,980

Gross profit = Sales - Cost of goods sold
Gross profit = $1,287,830 - $684,980
Gross profit = $602,850

Net income = Gross profit - Operating expenses
Net income = $602,850 - $167,750
Net income = $435,100

Off Company:

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
Cost of direct materials used in production = $110,090 + $247,700 - $124,400
Cost of direct materials used in production = $233,390

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
$712,280 = $233,390 + Direct labor + $123,300
Direct labor = $355,590

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
$705,680 = $833,500 - Work in process inventory, December 31
Work in process inventory, December 31 = $127,820

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
$712,280 = $123,300 + $705,680 - Finished goods inventory, December 31
Finished goods inventory, December 31 = $116,700

Gross profit = Sales - Cost of goods sold
Gross profit = $1,100,900 - $712,280
Gross profit = $388,620

Net income = Gross profit - Operating expenses
$244,400 = $388,620 - Operating expenses
Operating expenses = $144,220

Answer 2.

$ 167,750 On Company Statement of Cost of Goods Manufactured For the Month Ended December 31 Work in process inventory, December 1 Direct materials: Materials inventory, December 1 $ 87,370 Purchases $ 221,920 Cost of materials available for use $ 309,290 Less materials inventory, December 31 $ 75,140 Cost of direct materials used in production Direct labor Factory overhead Total manufacturing costs incurred during December Total manufacturing costs Less work in process inventory, December 31 Cost of goods manufactured $ $ $ 234,150 329,380 102,220 $ $ $ $ 665,750 833,500 141,540 691,960

Answer 3.

$ 1,287,830 On Company Income Statement For the Month Ended December 31 Sales Cost of goods sold: Finished goods inventory, December 1 $ Cost of goods manufactured $ Cost of finished goods available for sale $ Less finished goods inventory, December 31 $ Cost of goods sold Gross profit Operating expenses Net income 147,660 691,960 839,620 154,640 $ $ $ $ 684,980 602,850 167,750 435,100