Question

The following selected account balances are provided for vell dy WIL Sales Raw materials inventory, Dec. 31, 2016 Work in process inventory, Dec. 31, 2016 Finished goods inventory, Dec. 31, 2016 Raw materials purchases Direct labor Factory computer supplies used Indirect labor Repairs-Factory equipment Rent cost of factory building Advertising expense General and administrative expenses Raw materials inventory, Dec. 31, 2017 Work in process inventory, Dec. 31, 2017 Finished goods inventory, Dec 31, 2017 $ 1,329,000 39,000 50,700 63,400 194,100 235,000 23,500 51,000 5,250 56,000 102,000 132,000 42,100 38,200 65,200

Answer 1

Calculation of cost of goods manufactured
Beginning work in process		$50,700
Direct materials used
Raw material beginning inventory	$39,000
Add: Purchases	$194,100
Total raw material available	$233,100
Less: Ending raw material inventory	$42,100
Direct materials used		$191,000
Direct labor		$235,000
Factory overhead
Factory computer supplies	$23,500
Indirect labor	$51,000
Repairs- Factory equipment	$5,250
Rent cost of factory building	$56,000
Total factory overhead		$135,750
Total costs of work in process		$612,450
Less: Ending work in process inventory		$38,200
Cost of goods manufactured		$574,250
Income statement for Delray Manufacturing is shown below
Delray Manufacturing
Income statement
For the year ended December 31, 2017
Sales revenue		$1,329,000
Cost of goods sold
Finished goods inventory, December 31 2016	$63,400
Cost of goods manufactured	$574,250
Cost of goods available for sale	$637,650
Less: Finished goods inventory, December 31 2017	$65,200
Cost of goods sold		$572,450
Gross profit		$756,550
Operating expenses
Advertising expense	$102,000
General and administrative expense	$132,000
Total operating expense		$234,000
Operating income		$522,550