Question

Create a common size income statements from the information on the data sheet

Question #7 Data The following data from Hammer Time Inc, Custom Hammer One. 1/1/18 12/31/18 Materials Work in Process Finished Goods $134,000 $153,000 $132,000 $80,700 $157,000 $117,000 $521,000 $373,800 Manufacturing Costs during 2015 Materials purchased Direct labor Indirect labor Depreciation on Equipment Factory supplies & utilities $151,200 $72,000 $61,200 Sales Selling Expenses Administrative Expenses $5,287,000 $427,800 $2,190,000

Answer 1

Ans.	HAMMER TIME   INC.
	Common Size Income Statement
	For the Year Ended December 31, 2018
	Particulars	Amount	Amount
	Sales	$5,287,000	100.00%
	Less: Cost of goods sold	-$1,243,500	-23.52%
	Gross margin	$4,043,500	76.48%
	Less: Operating expenses:
	Selling expenses	-$427,800	-8.09%
	Administrative expenses	-$2,190,000	-41.42%
	Total operating expenses	-$2,617,800	-49.51%
	Operating Income	$1,425,700	26.97%
	* Common size percentage = Particular item / Total sales * 100
	*WORKING   NOTES:
	*Calculations for Cost of goods sold:
	FINN   INC.
	Schedule of Cost of Goods Manufactured & Sold
	Particulars	Amount	Amount
	Direct materials:
	Beginning raw materials inventory	$134,000
	Add: Purchase of direct materials	$521,000
	Raw materials available	$655,000
	Less: Ending raw materials inventory	-$80,700
	Direct materials used		$574,300
	Direct labor		$373,800
	Manufacturing overhead applied
	Indirect labor	$151,200
	Depreciation on equipment	$72,000
	Factory supplies & utilities	$61,200
	Total manufacturing overhead	$284,400
	Total manufacturing costs		$1,232,500
	Add: Beginning Work in process inventory		$153,000
	Less: Ending Work in process inventory		-$157,000
	Cost of goods manufactured		$1,228,500
	Add: Beginning finished goods inventory		$132,000
	Cost of goods available for sale		$1,360,500
	Less: Ending finished goods inventory		-$117,000
	Cost of goods sold		$1,243,500