Question

The following selected account balances are provided for Delray Mfg.

Sales	$	1,159,000
Raw materials inventory, beginning		37,000
Work in process inventory, beginning		52,900
Finished goods inventory, beginning		60,100
Raw materials purchases		175,500
Direct labor		249,000
Factory supplies used (indirect materials)		21,300
Indirect labor		52,000
Repairs—Factory equipment		5,250
Rent cost of factory building		51,000
Advertising expense		90,000
General and administrative expenses		138,000
Raw materials inventory, ending		46,800
Work in process inventory, ending		41,300
Finished goods inventory, ending		67,500

Prepare its schedule of cost of goods manufactured for the current year ended December 31.
Prepare an income statement for Delray Mfg. (a manufacturer).

Answer 1

Cost of Goods Manufactured Sheet

	Particulars	Calculations	Amount
A.	Direct Materials Consumed (Opening + Purchases - Closing)	( 37000 + 175500 - 46800)	165700
B.	Direct Labour		249000
C.	Direct Expenses (rent of Factory Building + Repairs of Factory Equipment)	( 51000+ 5250)	56250
=	Prime Cost (A+B+C)	( 165700 + 249000+ 56250)	470950
Add	Factory Overheads ( Factory Supplies Used)		21300
=	Gross Factory Cost	(470950 + 21300)	492250
Add	Opening Work-in-progress		52900
Less	Closing Work in progress		(41300)
=	Net Factory Cost	(492250 + 52900 - 41300)	503850
Add	General And Administrative Overheads		138000
=	Cost Of Production	(503850 + 138000)	641850
Add	Opening Finished Goods Inventory		60100
Less	Closing Finished Goods Inventory		67500
=	Cost of Goods Sold	( 641850 + 60100 - 67500)	634450
Add	Selling and Distribution Expenses		90000
=	Cost Of Sales	( 634450 + 90000)	724450
	Profit (Cost of Sales - Profit)	(115900- 724450)	434550
	Sales (Given)		1159000

  

Cost of Sales= $ 724,450

Income Statement of Delray Mfg.

for the year ending ............

Particulars	Amount	Particular	Amount
To Direct Materials Consumed Opening Raw Materials = 37000 Add: Purchases = 175500 Less: Closing Raw Materials= 46800	165700
To Direct Labour	249000
To Direct Expenses	56250
To Factory Supplies Used	21300	By Closing WIP	41300
To Opening Work in Progress	52900	To Gross Profit (Bal. c/d)	503850
To Gross Profit (Bal. b/d)	503850	By Sales	1159000
To Opening Finished Goods Inventory	60100	By Closing Finished Goods Inventory	67500
To Selling and Distribution Expenses	90000
To General and Administrative Overheads	138000
To Net Profit	434550
Total	1771650	Total	1771650