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 Company		Off Company
Materials inventory, December 1	$81,910		$103,210
Materials inventory, December 31	(a)		116,630
Materials purchased	208,050		(a)
Cost of direct materials used in production	219,520		(b)
Direct labor	308,800		232,220
Factory overhead	95,830		115,600
Total manufacturing costs incurred in December	(b)		667,770
Total manufacturing costs	781,420		916,510
Work in process inventory, December 1	157,270		248,740
Work in process inventory, December 31	132,690		(c)
Cost of goods manufactured	(c)		661,580
Finished goods inventory, December 1	138,430		115,600
Finished goods inventory, December 31	144,980		(d)
Sales	1,207,350		1,032,100
Cost of goods sold	(d)		667,770
Gross profit	(e)		(e)
Operating expenses	157,270		(f)
Net income	(f)		229,130

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
			$
Direct materials:
	$
	$
		$
Total manufacturing costs incurred during December
Total manufacturing costs			$
			$

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
Sales		$
Cost of goods sold:
Finished goods inventory, December 1	$
Cost of goods manufactured
	$
Less finished goods inventory, December 31
Cost of goods sold
Cost of goods sold		$
Operating expenses
		$

Answer 1

Answer 1.

On Company:

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
$219,520 = $81,910 + $208,050 - Materials inventory, December 31
Materials inventory, December 31 = $70,440

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
Total manufacturing costs incurred in December = $219,520 + $308,800 + $95,830
Total manufacturing costs incurred in December = $624,150

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
Cost of goods manufactured = $781,420 - $132,690
Cost of goods manufactured = $648,730

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
Cost of goods sold = $138,430 + $648,730 - $144,980
Cost of goods sold = $642,180

Gross profit = Sales - Cost of goods sold
Gross profit = $1,207,350 - $642,180
Gross profit = $565,170

Net income = Gross profit - Operating expenses
Net income = $565,170 - $157,270
Net income = $407,900

Off Company:

Gross profit = Sales - Cost of goods sold
Gross profit = $1,032,100 - $667,770
Gross profit = $364,330

Net income = Gross profit - Operating expenses
$229,130 = $364,330 - Operating expenses
Operating expenses = $135,200

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
$667,770 = $115,600 + $661,580 - Finished goods inventory, December 31
Finished goods inventory, December 31 = $109,410

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
$661,580 = $916,510 - Work in process inventory, December 31
Work in process inventory, December 31 = $254,930

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
$667,770 = Cost of direct materials used in production + $232,220 + $115,600
Cost of direct materials used in production = $319,950

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
$319,950 = $103,210 + Materials purchased - $116,630
Materials purchased = $333,370

Answer 2.

On Compan Statement of Cost of Goods Manufactured For the Month Ended December 31 Work in process inventory, December 1 157270 Direct materials: Materials inventory, December 1 81910 Purchases 208050 Cost of materials available for use 289960 Less materials inventory, December 31 Cost of direct materials used in production 70440 219520 Direct labor 308800 Factory overhead Total manufacturing costs incurred during December 95830 624150 Total manufacturing costs Less work in process inventory, December 31 781420 132690 ed Cost of goods manufactur 648730

Answer 3.

On Company Income Statement For the Month Ended December 31 Sales 1207350 Cost of goods sold: Finished goods inventory, December 1 Cost of goods manufactured Cost of finished goods available for sale Less finished goods inventory, December 31 Cost of goods sold 138430 648730 787160 144980 642180 Gross profit 565170 15 7270 Operating expenses Net income 407900