Question

Managerial Accounting:

Spring Northern Illinois Manufacturing provides p inois Manufacturing provides products and services needed to irrigate farms, ommercial properties, and private homes. It has a centrally located factory that the products it markets to retail outlets across the nation. The month of er has just ended and Northern Illinois needs to generate a cost of goods red and cost of goods sold for its income statement. The application of overhead d on direct labor hours. At the beginning of the year, the company estimated direct oor hours of 40,000 and total estimated overhead of $2,000,000. During the month of November, the number of direct labor hours was 3.275. The following additional data for November is provided: $ 17,500 Indirect Materials in Manufacturing Overhead Advertising Expense Depreciation - Factory Equipment Depreciation - Office Equipment Direct Labor Factory Supplies Factory Utilities Finished Goods Inventory - November 30 Finished Goods Inventory - October 31 Indirect Labor Office Supplies Expense Other Administrative Expenses Raw Materials Inventory - November 30 Raw Materials Inventory - October 31 Raw Materials Purchases Rent - Factory Equipment Repairs - Factory Equipment Salaries Sales Sales Commissions Work In Process Inventory - November 30 Work In Process Inventory - October 31 Property Tax on Factory 54,000 16,800 2,400 82,000 10,800 10,200 68,800 72,550 48,000 1,600 72,000 52,700 38,000 184,500 47,000 4,500 325,000 1,350,000 40,500 5 2,700 42,000 5,500 Instructions: From the above information, prepare a cost of goods manufactured schedule, cost of goods sold schedule, and an income statement to the net operating income.

Answer 1

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Norther Illinois Manufacturing
Calculation of overhead applied
Sermons Corporation	Amount $
Estimated overhead	2,000,000.00
Estimated direct labor hours	40,000.00
Predetermined overhead rate	50.00
Actual direct labor hours	3,275.00
Overhead applied	163,750.00
Calculation of actual overhead	Amount $
Indirect materials in manufacturing overhead	17,500.00
Depreciation- Factory Equipment	16,800.00
Factory Supplies	10,800.00
Factory Utilities	10,200.00
Indirect Labor	48,000.00
Rent- Factory Equipment	47,000.00
Repairs- Factory Equipment	4,500.00
Property Taxes on Factory	5,500.00
Calculation of actual overhead	160,300.00
Over applied overhead	3,450.00
Cost of goods manufactured and sold statement	Amount $	Amount $	Amount $
Beginning Work in process inventory			42,000.00
Direct materials used
Beginning Raw material inventory	38,000.00
Raw material Purchases	184,500.00
Total Raw material available for use	222,500.00
Less: Ending Raw material inventory	52,700.00
Direct materials used		169,800.00
Direct Labor		82,000.00
Manufacturing Overhead applied		163,750.00
Total Manufacturing costs			415,550.00
Total cost of work in process			457,550.00
Less: Ending Work in process inventory			52,700.00
Cost of goods manufactured			404,850.00
Cost of goods sold
Beginning Finished goods inventory			72,550.00
Add: Cost of goods manufactured			404,850.00
Cost of goods available for sale			477,400.00
Less: Finished goods inventory, ending			68,800.00
Less: Over applied overhead			3,450.00
Cost of goods sold			405,150.00
Income Statement	Amount $	Amount $
Sales Revenues
Sales Revenues		1,350,000.00
Less: Cost of goods sold		405,150.00
Gross Profit		944,850.00
Less: Operating costs
Advertising Expense	54,000.00
Depreciation- Office equipment	2,400.00
Office Supplies expense	1,600.00
Other Administrative expense	72,000.00
Salaries	325,000.00
Sales Commissions	40,500.00
Total Operating costs		495,500.00
Net Operating Income		449,350.00