Question

Ember Manufacturing Company is a manufacturer that produces a single product. The following information has been taken from the company's production, sales, and cost records for the month of January, 2019. Purchases, raw material Maintenance, factory Direct labour 80,000 20,000 140,000 12,000 8,000 3,000 Indirect Material, factory Insurance 1,000 3,600 Depreciation, administrative office equipment Cleaning Supplies, factory Salary expense, Accounting department Salary expense, Human resources Salary expense, Sales and marketing Salary, factory supervisor Salary, factory security Office supplies Depreciation, manufacturing building Rent Property taxes, manufacturing building Utilities 2,400 15,000 8,000 10,000 4,000 2,400 1,200 900 1,400 250 2,400 Additional information: 1. Insurance, utilities, rent and office supplies should be allocated as follows: Selling Administration 20% 40% 40% 10% 20% 50% 60% 60% 10% Insurance Office supplies Rent Utilities 70% 2. Inventory balances at the beginning and end of January were as follows: January 31 JanuaryI 20,000 45,000 25,000 30,000 40,000 30,000 Raw materials Work in process Finished goods 3. Monthly sales commissions are 2% of sales. 4. Sales for the month of January, 2019 were S 348,000 Required: a. Prepare a Schedule of cost of goods manufactured for the month of January. b. Prepare an income statement for the month of January (multi-step format).

Answer 1

Schedule of cost of goods manufactured for January

Particulars		Amount
Direct material
Beginning raw material	20000
Add : Raw material purchased	80000
Less : Ending raw material	(30000)
Directaterial used in production		70000
Direct labour		140000
Manufacturing overhead		51950
Total manufacturing cost		261950
Add : beginning WIP		45000
Less : closing WIP		(40000)
Cost of goods manufactured		$266950

Working note

Statement showing amount of manufacturing overhead

Particulars	Amount
Factory maintenance	20000
Depriciation factory equipment	12000
Indirect material factory	8000
Insurance (60% of 3000)	1800
Cleaning supplies factory	800
Factory supervisor salary	4000
Factory security salary	2400
Office supplies (10% of 1200)	120
Manufacturing building depriciation	900
Property tax manufacturing building	250
Utilities (70% of 2400)	1680
Manufacturing overhead	$51950

2. Income statement

Particulars	amount
Sales	348000
Less :- cost of goods sold (wn 1)	261950
Administrative cost (wn 2)	27920
Selling cost (WN 3)	23440
Net profit	$34690

Working note :-

1. Cost of goods sold

Particulars	amount
Cost of goods manufactured	266950
Add : beginning finished goods inventory	25000
Less : ending finished goods inventory	(30000)
Cost of goods sold	$261950

2 . Statement showing administrative cost

Particulars	amount
Insurance (20% of 3000)	600
Depriciation administrative equipment	2400
Salary expense accounting department	15000
Salary expense human resources	8000
Office supplies (50% of 1200)	600
Rent (60% of 1400)	840
Utilities (20% of 2400)	480
Total administrative exp	$27920

3 . Statement showing selling expense

Particulars	amount
Insurance (20% of 3000)	600
Depriciation sales equipment	1000
Advertisement exp	3600
Salary sales and marketing	10000
Office supplies (40% of 1200)	480
Rent (40% of 1400)	560
Utilities (10% of 2400)	240
Sales commission (2% of 348000)	6960
Selling cost	23440