Question

flow of cost amd income statement

ginocera inc. is a desginer, manufacture, and distributor of custom gorment kitchen knives.

Calculator LETO Flow of Costs and income Statement Grocera Inc. is a design, manufacturer and distributor of atom gourmettchen kryes. Anew there is called the kitchen Ninja was released for production in early 2018. in January, the company Spent $600,000 to develop a late night advertising infomercial for the new product. During 207, the company spent an additional $1,400,000 promoting the product through these infomercials, and $300,000 in legal costs. There were ready for manufacture on Buy 1. 2018 Grocera se a border cont system to accumulate costs associated with the kitchen and the unit direct materials cost for the knife is: Hardened steel banks (used for de start and ade) 4.00 Wood for lande) Packaging 0.50 The production process is straightforward. Forst, the hardened steel banks, which are purchased directly from a raw material supplier are stamped into a single piece of metal that includes both the blade and the Theme 20 Mer the indeshalts are s ped, they are brought to an assembly area where an employee attaches the handle to the short and packs the one into a decorative box. The direct or costs $0.50 perut The lives are sold to stores. Each store is given promotional materials, such as posters and assplays Promobo materials costo per ore. In addition, shipping costs average 0.20 per nie Total completed production was 1,200,000 g the ye. Other information is as follows: Number of customers (stores) 60.000 Mamber of res sold 1.120,000 Wholesale price (to store) per knite Factory overhead cost is applied to jobs at the rate of $800 per stamping machine hour after the knife blanks are stamped. There were an additional 25,000 stamped knives, handles and cases in process and waiting to be assembled on December 31, 2018 In your computations, if required, round interim per unit costs to two decimal places. Required:

Answer 1

Answer:

1. Annual income statement

Ginocera Inc. Income Statement For the year ended December 31, 20Y8
	$	$	$
Sales			17,920,000
Cost of goods sold			10,864,000
Gross Profit			7,056,000
Selling and Administrative expenses:
Selling expenses:
Informercial campaign	2,000,000
Promotional materials	3,600,000
Shipping expenses	224,000
Total selling expenses		5,824,000
Administrative expenses:
Legal expenses		800,000
Total selling and administrative expenses			6,624,000
Operating income			$ 432,000

Working Notes:-

a). Sales = total units sold × selling price per unit

1,120,000 units × $16 = $17,920,000

b). Cost of goods sold = total units sold × cost per unit**

1,120,000 units × $9.70 = $10,864,000

**Calculation of manufacturing cost per unit -

Direct Materials cost	$	$
Hardened steel blanks	4.00
Wood	1.50
Pakaging	0.50	6.00
Direct labor cost		0.50
Factory overhead ($800 ÷ 250 knives per hour)		3.20
Total manufacturing cost per knife		$9.70

c). Promotional materials = 60,000 stores × $60 = $3,600,000

d). Shipping expenses = 1,120,000 × 0.20 = $224,00

2. Balances in the Work in process and Finished goods inventories-

Finished Goods - $776,000

Work in process - $230,000

Working Notes:-

a).Finished goods inventory balance December 31, 20Y8

Units Produced	1,200,000
Less units sold	(1,120,000)
Units remaining in inventory	80,000
× manufacturing cost per unit	× 9.70
F.G inventory balance	$776,000

b). Work in process inventory balance, December 31 20Y8,

= Additional units waiting for assembly × ( direct Materials cost + factory overhead costs)

= 25,000 × (6.00 + 3.20) = $230,000