Question

Statement of Cost of Goods Manufactured and Income Statement for a Manufacturing Company The following information is available for Shanika Company for 20Y6: Inventories January 1 December 31 Materials $469,710 $587,140 Work in process 845,480 798,510 Finished goods 812,600 816,120 Advertising expense $398,670 Depreciation expense-office equipment 56,370 Depreciation expense-factory equipment 75,740 Direct labor 904,200 Heat, light, and power-factory 29,940 Indirect labor 105,690 Materials purchased 886,580 Office salaries expense 309,420 Property taxes-factory 24,660 Property taxes-headquarters building 51,080 Rent expense-factory 41,690 Sales 4,151,080 Sales salaries expense 509,640 Supplies-factory 20,550 Miscellaneous costs-factory 12,920 Required: 1. Prepare the 20Y6 statement of cost of goods manufactured. Shanika Company Statement of Cost of Goods Manufactured For the Year Ended December 31, 20Y6 Work in process inventory, January 1, 20Y6 $ 845,480 Direct materials: Materials inventory, January 1, 20Y6 $ 469,710 Purchases 886,580 Cost of materials available for use $ 812,680 Materials inventory, December 31, 20Y6 587,140 Cost of direct materials used in production $ 335,180 Direct labor 904,200 Factory overhead: Indirect labor $ 105,690 Depreciation expense-factory equipment 75,740 Heat, light, and power-factory 29,940 Property taxes-factory 24,660 Rent expense-factory 41,690 Supplies-factory 20,550 Miscellaneous costs-factory 12,920 Total factory overhead 311,460 Total manufacturing costs incurred in 20Y6 Total manufacturing costs $ Work in process inventory, December 31, 20Y6 Cost of goods manufactured $ Feedback 1. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process. 2. Prepare the 20Y6 income statement. Shanika Company Income Statement For the Year Ended December 31, 20Y6 $ Cost of good sold: $ $ $ Operating expenses: Administrative expenses: $ $ Selling expenses: $ Total operating expenses $

Answer 1

Solution 1:

Shanika Company
Schedule of cost of goods manufactured
For the year ended December 31, 20Y6
Work in process inventory, January 1, 20Y6			$8,45,480
Direct Materials:
Materials inventory, January 1, 20Y6	$4,69,710
Add: Purchases of Materials	$8,86,580
Cost of material available for use	$13,56,290
Less: Material Inventory, December 31, 20Y6	$5,87,140
Raw material used in production		$7,69,150
Direct Labor cost		$9,04,200
Factory Overhead:
Indirect Labor	$1,05,690
Depreciation Expense-Factory Equipment	$75,740
Heat Light and Power factory	$29,940
Property Taxes- Factory	$24,660
Rent Expense- Factory	$41,690
Supplies-Factory	$20,550
Miscellaneous Costs- Factory	$12,920
Total Factory Overhead		$3,11,190
Total Manufacturing Costs Incurred in 20Y6			$19,84,540
Total Manufacturing Costs			$28,30,020
Less: Work in process inventory, December 31, 20Y6			$7,98,510
Cost of goods manufactured			$20,31,510

Solution 2:

Shanika Company
Income Statement
For the Year Ended December 31, 20Y6
Sales		$41,51,080
Cost of Goods sold:
Finished Goods, January 1, 20Y6	$8,12,600
Add: Cost of Goods manufactured	$20,31,510
Cost of Goods available for sale	$28,44,110
Less: Finished Goods, Decemebr 31, 20Y6	$8,16,120	$20,27,990
Gross Profit		$21,23,090
Operating Expenses:
Administrative expenses:
Depreciation Expense- Office Equipment	$56,370
Office Salaries expense	$3,09,420
Property Taxes- Headquarters Building	$51,080	$4,16,870
Selling Expenses:
Advertising Expense	$3,98,670
Sales Salaries expenses	$5,09,640	$9,08,310
Total Operating Expenses		$13,25,180
Net Income		$7,97,910