Question

do not use image answer please.

Foxwood Company is a metal and woodcutting manufacturer, selling products to the home construction market. Consider the following data for 2018:

Sandpaper	$2,000
Materials-handling costs	70,000
Lubricants and coolants	5,000
Miscellaneous indirect manufacturing labour	40,000
Direct manufacturing labour	300,000
Direct materials inventory 1 Jan 2018	40,000
Direct materials inventory 31 Dec 2018	50,000
Finished goods inventory 1 Jan 2018	100,000
Finished goods inventory 31 Dec 2018	150,000
Work in process inventory 1 Jan 2018	10,000
Work in process inventory 31 Dec 2018	14,000
Plant leasing costs	54,000
Depreciation – plant equipment	36,000
Insurance on plant equipment	3,000
Direct material purchased	460,000
Sales revenues	1,360,000
Marketing promotions	60,000
Marketing salaries	100,000
Distribution costs	70,000
Customer service costs	100,000

Required:

1) Prepare a schedule of cost of goods manufactured. (6 marks)

2) Prepare a schedule of costs of goods sold. (2 marks)

3) Prepare an income statement. (4 marks)

Answer 1

1.

Foxwood Company
Schedule of cost of goods manufactured for the year ended 31 December 2018
Direct materials:
Beginning inventory, January 1, 2018		$    40,000.00
Purchases of direct materials		$ 460,000.00
Cost of direct materials available for use		$ 500,000.00
Ending inventory, December 31, 2018		$    50,000.00
Direct materials used		$ 450,000.00
Direct manufacturing labur		$ 300,000.00
Indirect manufacturing costs:
Sandpaper	$    2,000.00
Materials-handling costs	$ 70,000.00
Lubricants and coolants	$    5,000.00
Miscellaneous indirect manufacturing labour	$ 40,000.00
Plant-leasing costs	$ 54,000.00
Depreciation – plant equipment	$ 36,000.00
Insurance on plant equipment	$    3,000.00	$ 210,000.00
Manufacturing costs incurred during 2018		$ 960,000.00
Add beginning work in process January 1, 2018		$    10,000.00
Total manufacturing costs to account for		$ 970,000.00
Deduct ending work in process December 31, 2018		$    14,000.00
Cost of goods manufactured		$ 956,000.00

2.

Foxwood Company
Schedule of cost of goods Sold for the year ended 31 December 2018
Beginning finished goods, January 1, 2018	$100,000.00
Add: Cost of goods manufactured	$ 956,000.00
Less: Ending finished goods, December 31, 2018	$150,000.00
Cost of goods sold	$ 906,000.00

3.

Income statement for the year ended 31 December 2018
Schedule of cost of goods Sold for the year ended 31 December 2018
Revenues		$ 1,360,000.00
Beginning finished goods, January 1, 2018	$100,000.00
Cost of goods manufactured	$ 956,000.00
Ending finished goods, December 31, 2018	$150,000.00
Cost of goods sold		$      906,000.00
Gross Margin		$      454,000.00
Marketing, distribution and customer-service costs
Marketing promotions	$    60,000.00
Marketing salaries	$ 100,000.00
Distribution costs	$    70,000.00
Customer-service costs	$ 100,000.00	$      330,000.00
Operating income		$ 124,000.00