Question

Accounting 331 Description Beginning raw materials inventory Ending raw materials inventory Materials purchased Beginning work in process inventory Ending work in process inventory Beginning finished goods inventory Ending finished goods inventory Direct Labor Manufacturing overhead (Fixed) Manufacturing overhead (Variable) Revenue General and Administrative Expenses Selling Expenses Amount $200,000 $500,000 $1,800,000 $650,000 $200,000 $300,000 $900,000 $1,500,000 $1,200,000 $800,000 $10,000,000 $2,500,000 $1,200,000 Prepare an absorption costing income statement Revenue Cost of goods sold Gross Profit Expenses Total Expenses NET INCOME (LOSS)

Answer 1

Solution Absorption Costing Income Statement Revenue Cost of Goods Sold (WN-1) Gross Profit Expenses General and Administrative Expenses $2,500,000 Selling Expenses $1,200,000 $10,000,000 $4,850,000 $5,150,000 Total Expenses $3,700,000 $1,450,000 NET INCOME (LOSS) WN-1: Computation of Cost of Goods Sold Beginning Raw materials inventory Add: Materials purchased Less: Ending Raw materials inventory Raw materials used in production Add: Direct labor Add: Manufacturing overheads (Variable) Add: Manufacturing overheads (Fixed) Total Manufacturing cost Add: Beginning work in process inventory Less: Ending work in process inventory Cost of Goods manufactured Add: Beginning finished goods inventory Less: Ending finished goods inventory Cost of Goods Sold $200,000 $1,800,000 ($500,000) $1,500,000 $1,500,000 $800,000 $1,200,000 $5,000,000 $650,000 ($200,000) $5,450,000 $300,000 ($900,000) $4,850,000