Question

The following data pertain to Babor Company for the fiscal year ended December 31:

	Prior December 31				Current December 31
Purchases of materials					$	202,500
Direct labor						132,750
Indirect labor						52,500
Factory insurance						9,500
Depreciation—factory						36,750
Repairs and maintenance—factory						15,500
Marketing expenses						149,250
General and administrative expenses						88,250
Materials inventory	$	30,500				66,250
Work-in-Process inventory		16,750				19,000
Finished Goods inventory		18,500				24,400

Sales in the current year were $676,000.

Required:

Prepare a schedule of cost of goods manufactured and an income statement for the current year for Babor Company.

Answer 1

Babor Company Cost of Goods Manufactured for the year ended 31st December :- Particulars Amount $ Amount $ Work in process Inventory, January 1 16,750 Direct material used: Raw Material Inventory as on January 1 30,500 Add: Purchases 202,500 Cost of material available for use 233,000 Less: Raw Material Inventory on December 31 66,250 Cost of direct material used 166,750 Direct labor 132,750 Factory overhead:- Indirect labor 52,500 Factory insurance 9,500 Depreciation-factory 36,750 Repairs and maintenance-factory 15,500 Total Factory overhead 114,250 Total manufacturing cost incurred 430,500 Less: Work in process Inventory, December 31 19,000 Cost of goods manufactured 411,500 Amount $ Amounts 676,000 18,500 411,500 430,000 Income statement for fiscal year ended December 31 :- Particulars Sales Less: Cost of goods sold Beginning finished goods inventory Add: Cost of goods manufactured Cost of goods available for sale Less: Ending finished goods inventory Cost of goods sold Gross Profit Less: Operating expenses General and administrative expenses Marketing expenses Net Income 24,400 405,600 270,400 88,250 149,250 32,900