Question

Olympians Inc. manufactures and sells a unique product. The following data are extracted from the accounting records at December 31, 2017: Work in progress, ending Commissions Depreciation-factory Finished goods inventory, ending Other manufacturing overhead Rent Accounts receivable Supplies Direct materials, beginning Mortgage Production (units) Purchases direct materials Sales S Finished goods, beginning Prime costs (total) Direct labour Direct materials, ending Depreciation- equipment General office salaries Advertising Work in progress, beginning $67,000 230,000 To be determined To be determined 17,000 100,000 35,600 55,000 52.000 238,000 To be determined To be determined 1,200,000 519,000 410,000 23,000 To be determined 410,000 35,000 16,000 ADDITIONAL INFORMATION: 1. Supplies: $35,000 applies to factory operations. The remaining balance applies to sales and administration. 2. Rent: 60 % apply to factory operations and the rest applies to administration buildings. 3. Depreciation-equipment: calculated as equal to $1.25 per unit produced. 4. Deprecation-factory exceeds depreciation equipment by $6,100. 5. All the units produced during the year 2017 were sold. 6. Sale price per unit was $30 during the year 2017. 1. Prepare the schedule of Cost of Goods Manufactured at December 31, 2017. .....2. Prepare the Income Statement for the period ending December 31, 2017.

Answer 1

Number of units produced and sold = Sales/Sale price per unit = $1200000/$30 = 40000

1.

Olympians Inc.
Schedule of Cost of Goods Manufactured
For the Period Ending December 31, 2017
Direct materials, beginning	52000
Add: Purchases direct materials	80000
Direct materials available for use	132000
Less: Direct materials, ending	23000
Direct materials used ($519000 - $410000)		109000
Direct labor		410000
Manufacturing overhead:
Depreciation-equipment (40000 x $1.25)	50000
Depreciation-factory ($50000 + $6100)	56100
Rent (60% x $100000)	60000
Supplies	35000
Other manufacturing overhead	17000	218100
Total current manufacturing costs		737100
Add: Work in progress, beginning		16000
Total cost of work in process		753100
Less: Work in progress, ending		67000
Cost of goods manufactured $		686100

2.

Olympians Inc.
Income Statement
For the Period Ending December 31, 2017
Sales		1200000
Less: Cost of goods sold
Finished goods, beginning	0
Add: Cost of goods manufactured	686100
Cost of goods available for sale	686100
Less: Finished goods, ending	0
Cost of goods sold		686100
Gross margin		513900
Less Operating expenses
Commissions	230000
Advertising	35000
Rent ($100000 - $60000)	40000
Supplies ($55000 - $35000)	20000
General office salaries	410000
Total operating expenses		735000
Net income (loss)		-221100