Question

1. A Company expects to maintain the same inventories at the end of the year as the beginning of the year. The total of all production costs for the year is therefore assumed to be equal to the cost of goods sold. The various department heads were asked to submit estimates of the costs for their departments during the year. A summary report of these estimates is as follows:

	Estimated FIXED COST	Estimated VARIABLE COST (PER UNIT SOLD)
Production costs:
Direct Materials	N/A	$45.00
Direct Labor	N/A	40.00
Factory Overhead	$250,000	5.00
Selling Expenses:
Sales salaries and commissions	340,000	6.00
Advertising	106,000	N/A
Travel	6,000	N/A
Miscellaneous selling expenses	3,300	2.00
Administrative expenses:
Office and officers’ salaries	425,000	N/A
Supplies	9,000	5.00
Miscellaneous administrative expenses	6,700	2.00

10.) Several items are omitted from the income statement and cost of goods sold manufactured statement data for two different companies for the month of December: A Company $ 75,800 (a) 292,800 327,800 B Company $ 175,300 81,140 (a) (b) 397,800 158,400 (b) 567,220 246,060 1,509,000 Materials inventory Dec 1 Materials inventory Dec 31 Materials Purchased Cost of direct materials used in production Direct labor Factory Overhead Total Manufacturing costs incurred in December Total manufacturing costs Work in process inventory Dec 1 Work in process inventory Dec 31 Cost of goods manufactured Finished goods inventory Dec 983,000 129,000 1,717,320 198,320 182,200 (c) (c) 1,522,020 259,0808 234,000 Finished goods inventory Dec 207,400 (d) 31 Sales Cost of goods sold Gross profit Operating expenses Net Income l 1.137.000 (d) e) 127,600 (1) 1.934,320 1,534,040 (e) (0) 154,920 Instructions: 1. For both companies, determine the amounts of the missing items (a) through (O), identify them by letter 2. Prepare statement of goods manufactured for December for company A 3. Prepare incomes statements for December for company A 1. Company A 0.839 boo 4.53,000 Company B a GO1,500 b.695.700 c. 393,6a

Answer 1

А D AwNN в с A Company Statement of Cost of Goods Manufactured For the Month Ended Dec 31 $ 1,29,000 $ $ $ $ 75,800 2,92,800 3,68,600 -40,800 5 Work in process inventory, Dec 1 6 Direct Materials: 7 Materials Inventory, Dec 1 8 Purchases 9 Cost of Materials, available for use 10 Materials inventory, Dec 31 11 Cost of Direct Materials Used 12 Direct Labor 13 Factory Overhead 14 Total Manufacturing costs incurred in Dec 15 Total Manufacturing costs 16 Work in process inventory, Dec 31 17 Cost of Goods Manufactured $ $ $ $ $ $ 3,27,800 3,97,800 1,58,400 10,13,000 9,83,000 -1,82,200 $ 8,00,800 18

3 BC B Company Income Statement For the Month Ended Dec 31 4 Sales $ 19,34,320 5 Cost of Goods Sold: 6 Finished Goods Manufactured, Dec 1 $ 25,90,808 7 Cost of Goods Manufactured $ 15,22,020 8 Cost of Finished goods, available for sale $ 41,12,828 9 Finished goods inventory, Dec 31 $ -25,78,788 10 Cost of Goods Sold $ 15,34,040 11 Gross Profit $ 4,00,280 12 Operating Expenses $ 2,45,360 13 Net Income $ 1,54,920 14

с р AwNN $ 39,00,000 $ $ 16,00,000 23,00,000 А в Acom A Company Estimated Income Statement For the Year Ended December 31 4 5 Sales 6 Cost of Goods Sold 7 Direct Materials $ 6,75,000 8 Direct Labor $ 6,00,000 9 Factory Overhead $ 3,25,000 10 Total Cost of goods sold 11 Gross Profit 12 Expenses 13 Selling Expenses 14 Sales Salaries and commissions $ 15 Advertising $ 16 Travel $ 17 Miscellaneous Selling expense 18 Total Selling Expense $ 19 Administrative Expense 20 Office and Officers Salary $ 21 Supplies 22 Miscellaneous administrative expense $ 23 Total Expenses $ 24 Operating Income 25 4,30,000 1,06,000 6,000 33,300 5,75,300 4,25,000 9,000 6,700 10,16,000 $ 12,84,000