Question

Koufax Materials Corporation produces plastic products for home appliances and electronics. The financial department has produced the following information for the year ended December 31. Administrative salaries Depreciation on the administrative building Depreciation on the manufacturing plant Direct labor Direct materials inventory, January 1 Direct materials inventory, December 31 Direct materials purchased during the year Distribution costs Finished goods inventory, January 1 Finished goods inventory, December 31 Indirect labor Insurance (on manufacturing plant) Legal fees Maintenance on the manufacturing plant) Manufacturing plant utiities Marketing costs Other manufacturing plant costs Sales revenue Taxes (on manufacturing plant and property) Work-in-process inventory, January 1 Work-in-process inventory, December 31 $ 2,636,000 1,153,000 1,761,000 4,703,500 1,080, 200 1,246,000 8,967,000 668,000 1,653,000 1,380,500 553,000 64,200 507,300 226,400 795, 100 760,250 641,880 22,665,920 226,600 414,250 407,700 Required: a. Prepare a cost of goods manufactured and sold statement. b. Prepare an income statement.

Answer 1

Solution

(1)

Koufax Materials Corporation
Statement of Cost of Goods Manufactured and Sold
For the year ended December 31
Direct Materials Used:
Direct Materials Inventory, January 1	$   10,80,200.00
Direct Material Purchased	$   89,67,000.00
Less: Direct Materials Inventory, December 31	$ -12,46,000.00
Direct Material Used		$     88,01,200.00
Direct Labor		$     47,03,500.00
Manufacturing Overhead:
Indirect Labor	$      5,53,000.00
Depreciation on Manufacturing Plant	$   17,61,000.00
Insurance on Manufacturing Plant	$         64,200.00
Maintenance on Manufacturing Plant	$      2,26,400.00
Manufacturing Plant Utilities	$      7,95,100.00
Other Manufacturing Plant Costs	$      6,41,880.00
Taxes on Manufacturing Plant	$      2,26,600.00
Total Manufacturing Overhead		$     42,68,180.00
Total Manufacturing Costs		$   177,72,880.00
Add: Work-in-progress Inventory, January 1		$        4,14,250.00
Less: Work-in-progress Inventory, December 31		$      -4,07,700.00
COST OF GOODS MANUFACTURED		$   177,79,430.00
Add: Finished Goods Inventory, January 1		$     16,53,000.00
Less: Finished Goods Inventory, December 31		$    -13,80,500.00
COST OF GOODS SOLD		$   180,51,930.00

(2)

Koufax Materials Corporation
Income Statement
For the year ended December 31
Sales Revenue		$   226,65,920.00
Less: Cost of Goods Sold		$ -180,51,930.00
Gross Margin		$     46,13,990.00
Less: Operating Expenses
- Administrative Salaries	$   26,36,000.00
- Depreciation on Administrative Building	$   11,53,000.00
- Distribution Cost	$      6,68,000.00
- Legal Fees	$      5,07,300.00
- Marketing Costs	$      7,60,250.00	$    -57,24,550.00
Income from Operations		$    -11,10,560.00