Question

MANAGERIAL ACCOUNTING In-class Exercise - Topic 2-2 Name: Date: Various costs and sales data for Meriwell Company for the most recent year follow: $ 20,000 $ 40,000 Finished goods inventory, beginning Finished goods inventory, ending Depreciation, factory Administrative expenses Utilities, factory $ 27,000 $110,000 $ 8,000 Maintenance, factory $ 40,000 Supplies, factory $ 11,000 $ 4,000 Insurance, factory Purchases of raw materials Raw materials inventory, beginning $125,000 $ 9,000 Raw materials inventory, ending $ 6,000 Direct labor $ 70,000 Indirect labor $ 15,000 $ 17,000 Work in process inventory, beginning Work in process inventory, ending $ 30,000 Sales $500,000 Selling expenses $ 80,000 Required: 1. Prepare a schedule of cost of goods manufactured for Meriwell Company. Compute COGS for the period for Meriwell Company. 3. Prepare the Income Statement for Meriwell Company.

Answer 1

1.

cost of goods manufactured
	Particulars	Amount in $
Add	direct material	128000
Add	Direct labour	70000
Add	manufacturing overhead	105000
Add	opening WIP	17000
Less	Closing WIP	30000
	COGM	290000

working note
raw material opening	9000
raw material closing	6000
purchases	125000
material used	128000

working note2

Manufacturing OH
depreciation	27000
indirect labour	15000
utilities	8000
maintainace	40000
supplies	11000
insurance	4000
total	105000

2.

cost of goods sold
	particulars	Amount in $
Add	opening inventory of finished goods	20000
Add	COGM	290000
Less	closing inventory , ending	40000
	COGS	270000

3.

Income Statement	Amount (in $)
Sales(A)	500000
COGS(B)	270000
gross profit(A-B)=C	230000
Less: expenses(D)
Administrative exp	110000
selling exp	80000
net income(C-D)	40000

	Amount in $
cost	1000
loss of revenue	200
opportunity cost	1200