Question

Chapter 18 Managerial Accounting

Problem 1. The Target Company has the following information for the month of March. Prepare a (a) schedule of cost of goods manufactured, (b) an income statement for the month ended March 31, and (c) prepare only the inventory section of the balance sheet. $187,500 26,300 32,500 Purchases Materials inventory, March 1 Materials inventory, March 31 Direct labor Factory overhead Work in process, March 1S Work in process, March 31 Finished goods inventory, March 1 Finished goods inventory, March 31 Sales Sales and administrative expenses 3 T 2 51,000 73,000 3,600 37,900 5,400 41,200 567,000 191,000 1

Answer 1

Solution a:

Target Company
Schedule of cost goods manufactured
Direct materials:
Materaials inventory, March 1	$26,300
Add: purchase of raw materials	$1,87,500
Total raw materials available	$2,13,800
Less: Materaials inventory, March 31	$32,500	$1,81,300
Direct Labor		$51,000
Factory Overhead		$73,000
Total manufacturing costs		$3,05,300
Add: Work in process, March 1		$33,600
Total cost of work in process		$3,38,900
Less: Work in process, March 31		$37,900
Cost of goods manufactured		$3,01,000

Solution b:

Income Statement
Sales		$5,67,000
Cost of Goods sold
Cost of goods manufactured	$3,01,000
Add: Finished Goods Inventory, March 1	$25,400
Total cost of goods available for sale	$3,26,400
Less: Finished Goods inventory, March 31	$41,200	$2,85,200
Gross Profit		$2,81,800
Less: Sales and administrative expenses		$1,91,000
Net Income		$90,800

Solution c:

Target Company
(Partial) Balance Sheet
Inventories:
Materials inventory, March 31	$32,500
Work in process inventory, March 31	$37,900
Finished goods inventory, March 31	$41,200
Total Inventories		$1,11,600