Question

Managerial Accounting.

Excel Assignment #2 Spring 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: S 17,500 Indirect Materials in Manufacturing Overhead Advertising Expense Depreciation - Factory Equipment Depreciation - Office Equipment Direct Labor Factory Supplies Factory Utilities L Finished Goods Inventory - November 30 Finished Goods Inventory - October 31 Indirect Labor Office Supplies Expense Other Administrative Expenses Raw Materials Inventory - November 30 Raw Materials Inventory - October 31 Raw Materials Purchases Rent - Factory Equipment Repairs - Factory Equipment Salaries E Sales S Sales Commissions Work In Process Inventory - November 30 Work In Process Inventory - October 31, Property Tax on Factory 54,000 16,800 2,400 82.000 10,800 10,200 6 8,800 7 2,550 48,000 1,600 72,000 5 2,700 38,000 184500 4 7,000 4,500 3 25,000 350,000 40,500 5 2,700 42,000 1 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

Predetermined overhead rate = $2000000/40000 = $50 per hour
Overhead applied = 3275 x $50 = $163750

Cost of Goods Manufactured Schedule
Direct Materials
Raw Material Beginning Inventory	$            52,700
Raw Material Purchases	$         1,84,500
Total Raw Material Available	$         2,37,200
Less : Raw Material Ending Inventory	$            38,000
Raw Materials Used	$         1,99,200
Less : Indirect Materials	$            17,500
Direct Material used in production		$        1,81,700
Direct Labor		$           82,000
Manufacturing Overhead		$        1,63,750
Total Manufacturing Costs		$        4,27,450
Beginning Work in process inventory		$           52,700
Total Cost of Work in Process		$        4,80,150
Less: Ending Work in Process inventory		$           42,000
Cost of goods manufactured		$        4,38,150

Actual Manufacturing Overhead
Indirect Materials	$            17,500
Depreciation - Factory Equipment	$            16,800
Factory Supplies	$            10,800
Factory Utilities	$            10,200
Indirect Labor	$            48,000
Rent - Factory Equipment	$            47,000
Repairs - Factory Equipment	$              4,500
Property Tax on Factory	$              5,500
Total Actual Manufacturing Overhead	$        1,60,300

Cost of Goods Sold
Beginning Finished Goods Inventory	$            68,800
Add : Cost of Goods manufactured	$         4,38,150
Cost of Goods Available for sale	$         5,06,950
Less : Ending Finished Goods Inventory	$            72,550
Unadjusted Cost of Goods Sold	$         4,34,400
Under (Over) Applied Overhead	$             -3,450	=160300-163750
Adjusted Cost of Goods Sold	$         4,30,950

Income Statement
Sales Revenue		$      11,37,000
Less Cost of Goods Sold		$        4,30,950
Gross Profit		$        7,06,050
Operating Expenses
Advertising Expense	$            54,000
Depreciation - Office Equipment	$              2,400
Office Supplies Expense	$              1,600
Office Administrative expense	$            72,000
Sales Commission	$            40,500
Salaries	$         3,25,000
Operating Expenses		$        4,95,500
Net Income		$        2,10,550