Question

37 Cost of goods manufactured, Income statement ccount balances (in thousands) for the Peterson Company consider End of 2017 13,000 Peterson Company Beginning of 2017 Direct materials inventory 21.000 Work-in-process inventory 26.000 Finished-goods inventory Purchases of direct materials Direct manufacturing labor Indirect manufacturing labor Plant insurance Depreciation—plant, building, and equipment Repairs and maintenance-plant Marketing, distribution, and customer-service costs General and administrative costs 23,000 25.000 20.000 74,000 22.000 17.000 7,000 11,000 3,000 91,000 24,000 1. Prepare a schedule for the cost of goods manufactured for 2017. 2. Revenues for 2017 were $310 million. Prepare the income statement for 2017.

Answer 1

Peterson Company
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2017 (in thousands)
Direct Materials:
Beginning inventory, January 1, 2017	$21,000
Purchase cost of direct materials	$74,000
Cost of direct materials available for use           [$21,000 + $74,000]	$95,000
Ending inventory, December 31, 2017	$23,000
Direct materials used                                           [$95,000 - $23,000]		$72,000
Direct manufacturing labor cost		$22,000
Indirect manufacturing costs:
Indirect manufacturing labor	$17,000
Plant insurance	$7,000
Depreciation - plant, building, and equipment	$11,000
Repairs and maintenance - plant	$3,000
Total indirect manufacturing costs		$38,000
Manufacturing costs incurred during 2017          [$72,000 + $22,000 + $38,000]		$132,000
Add: Beginning work-in-process inventory, January 1, 2017		$26,000
Total manufacturing costs to account for		$158,000
Deduct: Ending work-in-process inventory, December 31, 2017		$25,000
Cost of goods manufactured		$133,000

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Peterson Company
Income Statment
For the Year Ended December 31, 2017 (in thousands)
Revenue		$310,000
Cost of goods sold:
Beginning finished goods, January. 1, 2017	$13,000
Cost of Goods Manufactured                       [Refer Cost of Goods Manufactured schedule]	$133,000
Cost of Goods Available for Sale               [$13,000 + $133,000]	$146,000
Ending finished goods, December. 31 2017	$20,000
Cost of goods sold                                          [$146,000 - $20,000]		$126,000
Gross margin                                                  [$310,000 - $126,000]		$184,000
Operating costs
Marketing, distribution, and customer-service costs	$91,000
General and administrative costs	$24,000
Total operating costs            [$91,000 + $24,000]		$115,000
Operating income/(loss)       [$184,000 - $115,000]		$69,000

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Note:

$310 million = $310,000,000 -->in thousands = $310,000