Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December On off Company Company $64,230 $80,930 (a) 91,450 163,140 (a) 172,140 (b) 242,150 182,090 75,150 90,640 (b) 523,620 Materials Inventory, December 1 Materials inventory, December 31 Materials purchased Cost of direct materials used in production Direct labor Factory overhead Total manufacturing costs incurred in December Total manufacturing costs Work in process inventory, December 1 Work in process inventory, December 31 Cost of goods manufactured Finished goods inventory, December 1 Finished goods inventory, December 31 Sales Cost of goods sold 612,760 123,320 718,660 195,040 (c) 104,050 (c) 518,760 108,550 90,640 (d) 113,690 946,750 809,300 (d) 523,620

Answer 1

Answer to 1
Calculation of Amounts of Missing Items
Letter		On Company		Off Company
a	$	55,230.00	$	261,410.00
b	$	489,440.00	$	250,890.00
c	$	508,710.00	$	199,900.00
d	$	503,570.00	$	85,780.00
e	$	443,180.00	$	285,680.00
f	$	319,860.00	$	106,020.00

Answer to 2
On Company
Statement of Cost of Goods manufactured
For the month ended December 31
Particulars	Amount in $	Amount in $
Opening work in process inventory		123,320.00
Direct materials:
Opening raw material inventory	64,230.00
Raw material purchased	163,140.00
Closing raw material inventory	55,230.00
Direct materials used in production	172,140.00
Direct labor	242,150.00
Factory overhead	75,150.00
Total manufacturing costs incurred during December	489,440.00	489,440.00
Total manufacturing costs		612,760.00
Closing work in process inventory		104,050.00
Cost of goods manufactured		508,710.00
Answer to 3
On Company
Income statement
For the month ended December 31
Particulars	Amount in $	Amount in $
Sales revenue		946,750.00
Cost of goods sold:
Opening finished goods inventory	108,550.00
Cost of goods manufactured	508,710.00
Closing finished goods inventory	(113,690.00)
Cost of goods sold	503,570.00	503,570.00
Gross profit		443,180.00
Operating expenses		123,320.00
Net income		319,860.00

Working Notes:

Calculation of missing values for On company.

(a). Calculation of Closing raw material inventory

Closing raw material inventory = opening raw material inventory + Purchases - Direct materials Consumption in production

Closing raw material inventory = 64230+163140-172140

Closing raw material inventory = $ 55230

(b) Calculation of total manufacturing costs incurred in December.

Manufacturing costs = Direct material Consumption + Direct labor + Factory overhead

Manufacturing costs = 172140+242150+75150

Manufacturing costs = $ 489440

(C ) Calculation of cost of goods manufactured

Cost of goods manufactured = Total manufacturing costs - Closing work in process inventory

Cost of goods manufactured = 612760- 104050

Cost of goods manufactured = $ 508710

(D) Calculation of cost of goods sold

Cost of goods sold= Opening finished goods inventory + Cost of goods manufactured - Closing finished goods inventory

Cost of goods sold= 108550+508710-113690

Cost of goods sold= $ 503570

(e) Calculation of gross profit

Gross profit = Sales - Cost of goods sold

Gross profit = 946750-503570

Gross profit = $ 443180

(f) Calculation of net income

Net income   = Gross profit - Operating expenses

Net income   = 443180-123320

Net income   = $ 319860

Calculation of missing values for off company.

(b) Calculation of direct materials used in production

Direct materials used in production = Total manufacturing costs incurred in Dec - Factory overhead - Direct labor

Direct materials used in production = 523620-90640-182090

Direct materials used in production = 250890

(a) Calculation of direct materials purchased

Direct material purchased = Direct material Used in production+Closing raw material inventory - Opening raw material inventory

Direct material purchased = 250890 +91450-80930

Direct material purchased = $ 261410

© Calculation of Closing work in process inventory

Closing work in process inventory = Total manufacturing costs - Cost of goods manufactured

Closing work in process inventory = 718660-518760

Closing work in process inventory = $ 199900

(d) Calculation of Closing finished goods inventory

Closing finished goods inventory = Opening finished goods inventory + Cost of goods manufactured - Cost of goods sold

Closing finished goods inventory = 90640+518760-523620

Closing finished goods inventory = $ 85780

(e) Calculation of gross profit

Gross profit = Sales - Cost of goods sold

Gross profit = 809300-523620

Gross profit = $ 285680

(f) Calculation of operating expenses

operating expenses = Gross profit - Net Income

operating expenses   = 285680-179660

operating expenses = $ 106020