Question

please answer both and show all calculations!!!

Toto Inc. manufactures and sells a unique product. The following data are extracted from the accounting records at December 31, 2016: Depreciation-factory Finished goods inventory.boining $20.000 $3.000 Trect matcrials incl. in Work in progressively be Prec es scenose 3) Salles (25,000 units) Prime costs (total) $200,000 ADDITIONAL INFORMATION: 1. Inventory balances at year-end were: Direct materials $20,000 Work in process $5,000 Finished goods to be determined 2. Supplies: 60 % apply to factory operations 3. Property taxes: 50 % apply to factory operations 4. Direct labour costs are equal to 110 % of manufacturing overhead costs. REQUIRED: 1. Prepare the schedule of Cost of Goods Manufactured at December 31, 2016. 2. Prepare the Income Statement for the period ending December 31, 2016.

Answer 1

Solution:

Computation of Cost of goods Manufactured
Direct Materials Cost
Beginning Inventory	$20,000
Purchases	$1,02,340
Cost of direct materials available for use	$1,22,340
Less: Ending Inventory	$20,000
Direct Materials Used	$1,02,340
Direct Manufacturing Labor costs	$99,660
PRIME COST	$2,02,000
Indirect Manufacturing Costs
Supplies	$3,600
Indirect Labor	$25,000
Property Taxes	$2,000
Depreciation (Factory)	$60,000
Indirect Manufacturing Costs	$90,600
Total Manufacturing Costs	$2,92,600
Add: Beginning Work in process	$3,000
Total manufacturing costa to account for	$2,95,600
Less: Ending Work in process	$5,000
Cost of goods manufactured	$2,90,600
Cost per unit ( Cost of goods manufactured / Units Produced )	$9.69

Computation of Cost of goods Sold
Cost of Goods Manufactured	$2,90,600
Add: Beginning Finished goods inventory	0
	290600
Less: Closing Finished goods inventory	48600
Cost of Goods sold	$2,42,000

Income Statement
Sales (25,000 units)		$3,00,000
Less: Cost of goods sold		$2,42,000
Gross Profit		$58,000
Less: Operating Expenses
Supplies	2400
Property Taxes	2000
Advertising Expense	27000
Total Operating Expenses		$31,400
Net Operating Income		$26,600

Workings

Direct Labor cost = 110%* Total Manufacturing Overhead Costs = 110%*90600 = 99660

Purchases = Prime Cost - Labor Costs + Ending Inventory - Beginning Inventory

= 202000-99660+20000-20000 = 102340

Manufacturing Cost per unit = Total Cost / Number of Units Produced

= 290,600 / 30000 = $9.69

Finished Goods (ending) in units = Units Produced - Units Sold = 30000-25000 = 5000

Finished Goods ending in $ = 5000*9.69 = $48600