Question

PR 1-5A Statement of cost of goods manufactured and income statement for a OBJ. 2, 3 manufacturing company The following information is available for The New Quest Corporation for 2016: Inventories January 1 December 31 Materials $351,000 $436,800 Work in process 631,800 592,800 Finished goods 608,400 576,000 Advertising expense Depreciation expense-office equipment Depreciation expense--factory equipment Direct labor Heat, light, and power-factory Indirect labor Materials purchased Office salaries expense Property taxes-factory Property taxes-office building Rent expense--factory Sales Sales salaries expense Supplies---factory Miscellaneous costs-factory $ 296,400 42,120 56,160 670,800 22,460 78,750 659,800 185,000 18,500 32,400 32,000 3,010,000 420,000 15,400 9,500 Instructions 1. Prepare the 2016 statement of cost of goods manufactured. 2. Prepare the 2016 income statement.

Answer 1

1.

The New Quest Corporation
Schedule of Cost of Goods Manufactured
Raw materials inventory , beginning	351,000
Add: Materials purchased	659,800
Raw Material available for use	1,010,800
Less:Ending raw material inventory	-436,800
Raw material used		574,000
Direct labor		670,800
Manufacturing Overheads:
Depreciation - Factory equipment	56,160
Heat, Light and power- factory	22,460
Indirect labor	78,750
Property taxes - factory	18,500
Rent expense - Factory building	32,000
Supplies- factory	15,400
Miscellaneous costs- factory	9,500
Total Manufacturing Overheads		232,770
Total Manufacturing Cost		1,477,570
Add :Work in process inventory, beginning		631,800
Less: Work in process inventory, ending		-592,800
Cost of goods manufactured		$1,516,570

2.

The New Quest Corporation
Income Statement
Revenues
Sales revenue		3,010,000
Cost of goods sold:
Finished goods inventory beginning	608,400
Cost of goods manufactured	1,516,570
Cost of goods available for sale	2,124,970
Finished goods inventory Ending	-576,000
Cost of goods sold		-1,548,970
Gross profit		1,461,030
Expenses:
Advertisement expense	296,400
Depreciation expense - office equipment	42,120
Office salaries expense	185,000
Property taxes- office building	32,400
Sales salaries expense	420,000
Total Expenses		-975,920
Net operating profit		$485,110

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