Question

Consider the following information for Fair Wind Yachts Inc., a manufacturer of sailboat rigging, blocks, and cordage. Advertising expenses Depreciation expense-administrative office Depreciation expense-plant and equipment Depreciation expense-delivery trucks Materials inventory, beginning Materials inventory, ending Direct materials purchases Direct labor Indirect labor Finished goods inventory, beginning Finished goods Inventory, ending Insurance on plant Heat and light for plant Repairs on plant building Supervisor's salary-plant Supplies-plant Supplies-administrative office Work-in-process inventory, beginning Work-in-process inventory, ending Sales representatives salaries Sales revenue $ 158,500 78,400 328,500 50,950 24,500 38,750 452,500 546,000 286,000 56,700 46,400 37,100 25,400 40,250 100.550 133,700 80,550 35,250 42,400 329, 250 3,062,000 Required: Prepare a statement of cost of goods manufactured and an income statement for Fair Wind Yachts for the year ended December 31

Answer 1

Required: Cost of goods manufactured:

Direct materials:
Material inventory - beginning	$24,500
(+) Direct materials purchased	$452,500
(-) Material inventory - ending	($30,750)
Direct material used		$446,250
Direct labor		$546,000
Factory overhead:
Indirect labor	$286,000
Insurance on plant	$37,100
Heat and light for plant	$25,400
Repairs on plant building	$40,250
Supervisor's salary - plant	$100,550
Supplies - plant	$133,700
Depreciation expenses - Plant & equipment	$328,500
Total factory overhead		$951,500
Total manufacturing cost to account for		$1,943,750
(+) WIP - Beginning	$35,250
(-) WIP - Ending	($42,400)
Cost of goods manufactured		$1,936,600

Required: Income statement

Sales revenue		$3,062,000
(-) Cost of goods sold:
Cost of goods manufactured	$1,936,600
(+) Finished goods, beginning	$56,700
Total goods available for sale	$1,993,300
(-) Finished goods, ending	($46,400)
Cost of goods sold		($1,946,900)
Gross profit		$1,115,100
(-) Selling and administrative expenses:
Advertising expenses	$158,500
Supplies - Administrative office	$80,550
Sales representative salaries	$329,250
Depreciation expenses - Administrative office	$78,400
Depreciation expenses - Delivery truck	$50,950
Total selling and administrative expenses		($697,650)
Net income		$417,450