Question

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

	Rainier Company	Yakima Company
Materials inventory, May 1	$   100,000	$     48,200
Materials inventory, May 31	(A)	50,000
Materials purchased	950,000	710,000
Cost of direct materials used in production	938,500	(A)
Direct labor	2,860,000	(B)
Factory overhead	1,800,000	446,000
Total manufacturing costs incurred in May	(B)	2,484,200
Total manufacturing costs	5,998,500	2,660,600
Work in process inventory, May 1	400,000	176,400
Work in process inventory, May 31	382,000	(C)
Cost of goods manufactured	(C)	2,491,500
Finished goods inventory, May 1	615,000	190,000
Finished goods inventory, May 31	596,500	(D)
Sales	9,220,000	4,550,000
Cost of goods sold	(D)	2,470,000
Gross profit	(E)	(E)
Operating expenses	1,000,000	(F)
Net income	(F)	1,500,000

Instructions

1. For both companies, determine the amounts of the missing items (A) through (F), identifying them by letter.

   Answer

   Check Figure: B. Yakima Company, $1,330,000

2. Prepare Yakima Company's statement of cost of goods manufactured for May.

3. Prepare Yakima Company's income statement for May.

Answer 1

Answer :-

A). Rainier Company :-

Cost of Direct Materials Used in Production = Beginning Inventory + Materials Purchase - Ending Inventory

$938500 = $100000 + $950000 - Ending Inventory

Ending Inventory = $1050000 - $938500 = $111500

A) Yakima Company :-

Cost of Direct Materials used in Production = $48200 + $710000 - $50000 = $708200

Total Manufacturing Cost Incurred May = Cost of Direct Materials used in production + direct Labor + factory Overhead

B) Rainier :-

Total Manufacturing Cost incurred May = $938500 + 2860000 + 1800000 = $5598500

B) Yakima :-

Direct Labor = $2484200 - $708200 - $446000 = $1330000

Cost of Goods Manufactured = Total Manufacturing Costs - Ending WIP Inventory

C) Rainier :-

Cost of Goods Manufactured = $5998500 - $382000 = $5616500

C) Yakima :-

Ending WIP Inventory = $2660600 - $2491500 = $169100

Cost of Goods Sold = Beginning Finished Goods + Cost of Goods Manufactured - Ending Finished Goods

D) Rainier Company :-

Cost of Goods Sold = $615000 + $5616500 - $596500 = $5635000

D) Yakima :-

Ending Finished Goods = $190000 + $2491500 - $2470000 = $211500

Gross Profit = Sales - Cost of Goods Sold

E) Rainier :-

Gross Profit = $9220000 - $5635000 = $3585000

E) Yakima :-

Gross Profit = $4550000 - $2470000 = $2080000

Net Income = Gross Profit - Operating Expenses

F) Rainier :-

Net Income = $3585000 - $1000000 = $2585000

F) Yakima :-

Operating Expenses = $2080000 - $1500000 = $580000

Letter	Rainier	Yakima
A	$111500	$708200
B	$5598500	$1330000
C	$5616500	$169100
D	$5635000	$211500
E	$3585000	$2080000
F	$2585000	$580000

b) Statement of Cost of Goods Manufactured :-

Particulars	Amount($)	Amount($)
Beginning Materials Inventory	48200
Add: Materials Purchased	710000
Less : Ending Materials Inventory	(50000)
Cost of Direct Materials Used In Production	708200	708200
Direct Labor		1330000
Factory Overhead		446000
Total Manufacturing Costs Incurred		2484200
Add : Beginning WIP Inventory		176400
Total Manufacturing Cost		2660600
Less : Ending WIP Inventory		(169100)
Cost of Goods Manufactured		2491500

c) Income Statement :-

Particulars	Amount($)	Amount($)
Sales		4550000
Less : Cost of Goods Sold :-
Beginning Finished Goods	190000
Add : Cost of Goods Manufactured	2491500
Less : Ending Finished Goods	(211500)	(2470000)
Gross Profit		2080000
Less : Operating Expenses		($580000)
Net Income		1500000