Question

QUESTION 2 (16 MARKS) Nana Corporation, a manufacturing company, produces a single information has been taken from the company's production, sales, and completed year. oduces a single product. The following chion, sales, and cost records for the just 11,600 1,200 RM520,000 Production in units Sales in units Ending finished goods inventory in units Sales Costs: Direct labor Raw materials purchased Manufacturing overhead Selling and administrative expenses RM36,000 RM192,000 RM120,000 RM152,000 Beginning of the year End of the year RM12,000 Inventories: Raw materials Work in process Finished goods RM8,000 RM20,000 Nil RM16,000 The finished goods inventory is being carried at the average unit production cost for the year. The selling price of the product is RM50 per unit. Required: a) Prepare a schedule of cost of goods manufactured for the year. (8 marks) b) Prepare the income statement for the year. (8 marks)

Answer 1

(a) Cost of goods manufactured statement :- (amount in RM)

Direct Materials
Opening raw material inventory	8,000
Add: Purchases	192,000
Raw material available for use	200,000
Less: Ending raw material inventory	(12,000)
Cost of raw material used		188,000
Direct labor		36,000
Manufacturing overhead		120,000
Total Manufacturing cost		344,000
Add: Work in process (opening)		20,000
Cost of goods to be manufactured		364,000
Less: Work in process (ending)		(16,000)
Cost of goods manufactured		348,000

Cost of goods per unit = 348,000/11,600 = RM30 per unit.

Sales in unit = 520,000/50 = 10,400 units

Income statement :- (amount in RM)

Sales		520,000
Cost of goods sold:
Cost of goods manufactured	348,000
Add: finished goods opening inventory	0
Cost of goods available for sale	348,000
Less: finished goods ending inventory (1,200 x 30)	(36,000)	312,000
Gross profit		208,000
Selling and administration expense		152,000
Net Income		56,000