Question

WEEK ONE CHAPTER TWO HOMEWORK Saved Problem 2-74 (Algo) Reconstruct Financial Statements (LO 2-1, 6) Westlake, Inc. produces metal fittings for the aerospace industry. The administrative and manufecturing operations occupy the same 200,000 square foot building. The manufacturing plant uses 150.000 square feet. Depreciation is assigned based on building use. Indirect labor represents 15 percent of the total manufacturing plant labor. 25 points The financial information for the year just ended is shown as follows. ellook (Thousands of dollars) Administrative costs Total building depreciation Direct materials inventory, January 1 Direct materials inventory, Decenber 31 Direct materials purchased during the year Finished goods inventory, Decenber 31 Indirect iabor $ 240 23 Print 28 1,578 88 228 Haintenance on plant machinery Harket ing costs Operating profit other plant overhead Plant supervision and administration Plant supplies and indirect materials Sales revenue Taxes on manufacturing property References 148 128 776 91 163 75 5,800 125 Mork-in-process inventory, Decentber 31 118 Required: 1. Prepare a cost of goods manufactured and sold statement. 2. Prepare an income statement.

Answer 1

Schedule of Cost of Goods Manufactured
Beginning work in process , January 1		88
Manufacturing costs
Beginning direct material inventory, January 1	23
Add: Direct Material purchased	1,578
Direct Materials available for use	1,601
Less:Ending direct material inventory, December 31	28
Direct Materials used in production		1,573
Direct Labor		1,292
Manufacturing overhead
Indirect Labor	228
Depreciation on plant	420
Maintenance on plant machinery	148
Plant supervision and administration	161
Plant supplies and indirect materials	75
Taxes on manufacturing property	125
Other plant overhead	91
Total overhead		1,248
Total Manufacturing Costs		4,113
Total cost of work in process during the year		4,201
Less: Ending Work in Process, December 31		118
Cost of Goods Manufactured this year		4,083
Add: Beginning finished goods,January 1		521
Cost of goods sold available for sale		4604
Less: Ending finished goods,December 31		88
Cost of goods sold		4516

Sales revenue		5800
Less: Cost of goods sold		4516
Gross Margin		1284
Administrative costs	240
Depreciation on office building	140
Marketing costs	128
Total operating costs		508
Operating profit		776

Workings:

Depreciation :

Plant = 560*150/200 = 420

Office = 560*50/200 = 140

Direct Labor = 228*100/15 - 228 = 1292