Question

Koufax Materials Corporation produces plastic products for home appliances and electronics. The financial department has produced the following information for the year ended December 31. Administrative salaries Depreciation on the administrative building Depreciation on the manufacturing plant Direct labor Direct materials inventory, January 1 Direct materials inventory, December 31 Direct materials purchased during the year Distribution costs Finished goods inventory, January 1 Finished goods inventory, December 31 Indirect labor Insurance con manufacturing plant) Legal fees Maintenance on the manufacturing plant) Manufacturing plant utiities Marketing costs Other manufacturing plant costs Sales revenue Taxes (on manufacturing plant and property) Work-in-process inventory, January 1 Work-in-process inventory, December 31 $ 2,637,000 1,154,000 1,762,000 4,704,500 1,081,200 1,247.000 8,968,000 669,000 1,654,000 1,381,500 554,000 65,200 508,300 227,400 796,100 761,250 642,880 22,666,920 227,600 415,250 408,700 Required: a. Prepare a cost of goods manufactured and sold statement b. Prepare an income statement.

Answer 1

Koufax Materials Corporation
Schedule of cost of goods manufactured
For the year ended December 31,
Direct materials
Direct materials inventory, January 1	$ 1,081,200
Add: Raw material purchases	$ 6,968,000
Total raw materials available	$ 8,049,200
Less: Direct material inventory, December 31,	$ 1,247,000
Raw material used in production		$    6,802,200
Direct labor		$    4,704,500
Manufacturing overhead
Depreciation on the manufacturing plant	$ 1,762,000
Indirect labor	$     554,000
Insurance on manufacturing plant	$        65,200
Maintenance on the manufacturing plant	$     227,400
Manufacturing plant utilities	$     796,100
Other manufacturing plant costs	$     642,880
Taxes on manufacturing plant and property	$     227,600
Total manufacturing overhead		$    4,275,180
Total manufacturing cost		$ 15,781,880
Add: Work in process inventory, January 1,		$        415,250
Less: Work in process inventory, December 31,		$        408,700
Cost of goods manufactured		$ 15,788,430

Koufax Materials Corporation
Schedule of cost of goods sold
For the year ended December 31,
Finished goods inventory, January 1,	$    1,654,000
Cost of goods manufactured	$ 15,788,430
Cost of goods available for sale	$ 17,442,430
Less: Finished goods inventory, December 31,	$    1,381,500
Cost of goods sold	$ 16,060,930

Koufax Materials Corporation
Income statement
For the year ended December 31,
Sales revenues		$ 22,666,920
Less: Cost of goods sold		$ 16,060,930
Gross profit		$    6,605,990
Less: Operating expenses
Administrative salaries	$ 2,637,000
Depreciation on the administrative building	$ 1,154,000
Distribution costs	$     669,000
Legal fees	$     508,300
Marketing cost	$     761,250
Total operating costs		$    5,729,550
Net income		$        876,440

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