Question

eBook Calculator Print Item Income Statement, Cost of Goods Manufactured Spencer Company produced 200,000 cases of sports drinks during the past calendar year. Each case of 1-liter bottles sells for $37. Spencer had 2,500 cases of sports drinks in finished goods inventory at the beginning of the year. At the end of the year, there were 11,500 cases of sports drinks in finished goods inventory. Spencer's accounting records provide the following information Purchases of direct materials Direct materials inventory, January1 Direct materials inventory, December 31 Direct labor Indirect labor Depreciation, factory building Depreciation, factory equipment Property taxes on factory Utilities, factory $2,360,000 290,000 110,000 1,100,000 334,000 525,000 416,000 55,000 150,000 200,000 85,000 214,000 500,000 90,000 K) Insurance on factory Salary, sales supervisor Commissions, salespersons General administration Pre Chock Hy Work 3 more Check My work uses remaining

Answer 1

Spencer Company
Statement of Cost of Goods Manufactured
For the year ended December 31, 2014
Direct Material
Beginning material inventory	$     290,000
Add: Material Purchased	$ 2,360,000
Direct material available for production	$ 2,650,000
Less: Ending Material Inventory	$     110,000
Direct meterial used		$ 2,540,000
Direct Labor		$ 1,100,000
Factory overhead
Indirect Labor	$     334,000
Depreciation expenses, Factory Building	$     525,000
Depreciation expenses, Factory Equipment	$     416,000
Property taxes on factory	$        65,000
Utilities, Factory	$     150,000
Insurance on factory	$     200,000
		$ 1,690,000
Total Manufacturing Cost		$ 5,330,000
Add:Beginning work in progress inventory		$     460,000
Less: Ending work in progress inventory		$     750,000
Cost of goods manufactured		$ 5,040,000

2.

Cost per unit = $5,040,000/200,000

Cost per unit = $25.20

3.

Spencer Company
Income Statement: Absorption costing
For the year ended December 31, 2014
Sales (191,000*$37)		$ 7,067,000	100%
Cost of goods sold
Finished goods inventory, Beginning	$     107,500
Add: Cost of goods manufactured	$ 5,040,000
Cost of goods available for sale	$ 5,147,500
Less: Finished goods inventory, Ending	$     488,750	$ 4,658,750	$4,658,750/$7,067,000 = 65.92%
Gross profit		$ 2,408,250	$2,408,250/$7,067,000 = 34.08%
Less: Operating expenses
Salary, Sales supervisor	$        85,000
Commissions, sales person	$     214,000
Advertising	$     500,000	$     799,000	$799,000/$7,067,000 = 11.31%
General administration		$     390,000	$390,000/$7,067,000 = 5.52%
Net income		$ 1,219,250	$1,219,250/$7,067,000 = 17.25%

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