Question

ABC Company reports the following information: Sales $160,000 General and Administrative Expenses 9,000 Beginning Raw Materials Inventory 6,000 Ending Raw Materials Inventory 5,000 Beginning Work-in-Process Inventory 3,000 Ending work-in-Process Inventory 2,000 Beginning Finished Goods Inventory 4,000 Ending Finished Goods Inventory 6,000 Direct Labor 29,000 Material Purchases 92,000 Mfg. Overhead (insurance % taxes) 20,000 Note: You can assume that overhead was correctly applied.

Prepare and submit:
a. ABC’s Cost of Goods Manufactured Statement.
b. ABC’s Cost of Goods Sold Statement.
c. ABC’s Income Statement for ABC Co.

Answer 1

ABC Company
Cost of Goods Manufactured Statement
Direct Materials:
Beginning raw materials inventory	$6,000
Add: Raw materials purchases	$92,000
Total raw materials inventory available for consumption	$98,000
Less: Ending raw materials inventory	$5,000
Raw Materials used in Production		$93,000
Direct labor		$29,000
Manufacturing Overhead		$20,000
Total manufacturing costs         [$93,000 + $29,000 + $20,000]		$142,000
Add: Beginning Work in Process inventory		$3,000
Total Cost of work in Process		$145,000
Less: Ending Work in process inventory		$2,000
Cost of Goods Manufactured		$143,000

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ABC Company
Cost of Goods Sold Statement
Beginning Finished goods inventory	$4,000
Add: Cost of Goods Manufactured            (Refer cost of goods manufactured statement)	$143,000
Total Cost of Goods available for sale	$147,000
Less: Ending Finished goods inventory	$6,000
Cost of Goods Sold	$141,000

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ABC Company
Income Statement
Sales	$160,000
Cost of Goods Sold    [Refer cost of goods sold statement]	$141,000
Gross Margin                                   [$160,000 - $141,000]	$19,000
General and Administrative Expenses	9000
Net Income      [$19,000 - $9,000]	$10,000