Question

The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year. $ 1,659 900 1,160 855 16 13 3,670 477 Administrative costs Building and machine depreciation (75% of this amount is for factory) Building utilities (90% of this amount is for factory) Direct labor Direct materials inventory, December 31 Direct materials inventory, January 1 Direct materials purchases Factory supervision Finished goods inventory, December 31 Finished goods inventory, January 1 Indirect factory labor Indirect materials and supplies Marketing costs Property taxes on building (85% of this amount is for factory) Sales revenue Work-in-process inventory, December 31 Work-in-process inventory, January 1 54 903 685 872 900 12,954 Required: 1. Prepare a cost of goods sold statement. 2. Prepare an income statement. Complete this question by entering your answers in the tabs below.

Answer 1

BILLINGS TOOL & DIE
Statement of Cost of Goods Sold
For the Year Ended December 31
($000)
Beginning work in process, Jan. 1		$32
Manufacturing Costs:
Direct Materials:
Beginning inventory, Jan. 1	$13
Add: purchases	$3,670
Direct materials available	$3,683
Less: Ending inventory, Dec. 31	$16
Direct Materials used		$3,667
Direct labor		$855
Manufacturing overhead:
Building and machine depreciation    [$900 x 75%]	$675
Building utilities                                 [$1,160 x 90%]	$1,044
Factory supervision	$477
Indirect factory labor	$903
Indirect materials and supplies	$685
Property taxes - factory                   [$900 x 85%]	$765
Total manufacturing overhead		$4,549
Total manufacturing costs                           [$3,667 + $855 + $4,549]		$9,071
Total Cost of work in Process during the year              [$32 + $9,071]		$9,103
Less: Ending work in process, Dec. 31		$28
Cost of Goods Manufactured during the year		$9,075
Beginning finished goods, Jan. 1		$54
Finished goods inventory available for sale                       [$9,075 + $54]		$9,129
Less: Ending finished goods inventory, Dec. 31		$61
Cost of Goods Sold		$9,068

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BILLINGS TOOL & DIE
Income Statment
For the Year Ended December 31
($000)
Sales revenue		$12,954
Less: Cost of goods sold   [Refer statement of cost of goods sold]		$9,068
Gross margin		$3,886
Marketing and Administrative costs
Administrative costs	$1,659
Marketing costs	$872
Depreciation             [$900 x 25%]	$225
Utilities                     [$1,160 x 10%]	$116
Properties taxes        [$900 x 15%]	$135
Total marketing and Administrative costs		$3,007
Operating profit        [$3,886 - $3,007]		$879