Question

Herrmann Corporation is a manufacturer of saw blades. The blades are sold to machine and equipment dealers, and marketing is handled via a network of regionalized manufacturer representatives. The only selling expenses pertain to commissions paid to the manufacturer representatives. The commissions are 6% of total sales. The following information pertains to operations during the calendar year 20X8. Sales Administrative salaries Direct labor Indirect labor Total depreciation Total utilities Interest expense Other factory overhead $ 8,645,661 525,654 2,039,804 739,233 186,180 156,000 40,500 46,472 Of the total depreciation, 80% relates to manufacturing and 20% relates to general and administrative costs. Of the total utilities, 70% relates to manufacturing and 30% relates to general and administrative costs. Income taxes are 30% of income before taxes. Following is information about various inventory components

Answer 1

a) Schedule of Cost of Goods Manufactured:			Amount $
Opening WIP			728206		calculation
Raw materials:
OB	465054
add:Purchases	2600799
Total available	3065853
Less:CB	487399
Raw Mat. Used		2578454
Direct Labor		2039804
Manuf. Overhead:
Indirect Mat.:
OB	33048
add:Purchases	192300
Total available	225348
Less:CB	43029
Ind. Mat. Used	182319
Indirect Labor	739233
Factory Depreciation	148944				(186180*80%)
Factory Utilities	109200				(156000*70%)
Other factory overhead	46472
Total Manuf. Overhead		1226168
Total Manuf. Expenses			5844426
Total Work in Process			6572632
Less:Closing WIP			566442
Cost of Goods Manufactured			6006190
b) Cost of Goods Sold:
	Amount $
Beginning Finished Goods	745598
Plus: Cost of Goods Manufactured	6006190
Goods available for sale	6751788
Less: Ending Finished Goods	932105
Cost of Goods Sold	5819683
c) Income Statement:
	Amount $
Sales	8645661
Less:COGS	5819683
Gross Profit	2825978
Less: Operating Expenses:
Selling - commission	518739.7				(8645661*6%)
General and Administrative:
Salaries	525654
Depreciation	37236				(186180*20%)
Utilities	46800				(156000*30%)
Interest expense	40500
Total Operating Expenses:	1168930
Income before Incometaxes	1657048
Less:Income taxes (30%)	497114.5
Net Income	1159934