Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December On Off Company Company Materials inventory, December 1 Materials inventory, December 31 $81,260 (a) 206,400 217,780 Materials purchased $107,260 121,200 (a) (b) 241,340 Cost of direct materials used in production Direct labor 306,350 Factory overhead 95,070 Total manufacturing costs incurred in December Total manufacturing costs Work in process inventory, December 1 (b) 775,220 156,020 131,640 (c) 137,330 Work in process inventory, December 31 Cost of goods manufactured Finished goods inventory, December 1 Finished goods inventory, December 31 120,130 693,970 952,470 258,500 (c) 687,540 120,130 (d) 1,072,600 693,970 693,970 (e) 143,830 1,197,770 Sales Cost of goods sold (d) Gross profit (e)

Answer 1

Answer 1.

On Company:

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
$217,780 = $81,260 + $206,400 - Materials inventory, December 31
Materials inventory, December 31 = $69,880

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
Total manufacturing costs incurred in December = $217,780 + $306,350 + $95,070
Total manufacturing costs incurred in December = $619,200

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
Cost of goods manufactured = $775,220 - $131,640
Cost of goods manufactured = $643,580

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
Cost of goods sold = $137,330 + $643,580 - $143,830
Cost of goods sold = $637,080

Gross profit = Sales - Cost of goods sold
Gross profit = $1,197,770 - $637,080
Gross profit = $560,690

Net income = Gross profit - Operating expenses
Net income = $560,690- $156,020
Net income = $404,670

Off Company:

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
$693,970 = Cost of direct materials used in production + $241,340 + $120,130
Cost of direct materials used in production = $332,500

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
$332,500 = $107,260 + Materials purchased - $121,200
Materials purchased = $346,440

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
$687,540 = $952,470 - Work in process inventory, December 31
Work in process inventory, December 31 = $264,930

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
$693,970 = $120,130 + $687,540 - Finished goods inventory, December 31
Finished goods inventory, December 31 = $113,700

Gross profit = Sales - Cost of goods sold
Gross profit = $1,072,600 - $693,970
Gross profit = $378,630

Net income = Gross profit - Operating expenses
$238,120 = $378,630 - Operating expenses
Operating expenses = $140,510

Answer 2.

On Company Statement of Cost of Goods Manufactured For the Month Ended December 31 Work in process inventory, December 1 Direct materials: Materials inventory, December 1 156020 81260 Purchases 206400 Cost of materials available for use 287660 Less materials inventory, December 31 Cost of direct materials used in production Direct labor Factory overhead Total manufacturing costs incurred during December Total manufacturing costs Less work in process inventory, December 31 Cost of goods manufactured 69880 217780 306350 95070 619200 775220 131640 643580 On Company Income Statement For the Month Ended December 31 Sales 1197770 Cost of goods sold: Finished goods inventory, December 1 Cost of goods manufactured Cost of finished goods available for sale Less finished goods inventory, December 31 137330 643580 780910 143830 Cost of goods sold Gross profit Operating expenses 637080 560690 156020 Net income 404670