Question

Please help solve and explain. Thanks.

Backyard Fashions is a manufacturer of backyard and deck furniture. Its products are in high dermand and it carries no inventory. Following is a list of selected account balarices from its trial balance for the most recent year ended December 31 in no particular order.) EEl (Click the icon to view the December 31 account balances.) Read the requirements iDecember 31 Account Balances Salaries and wages (for administrative and sales staf) Stain (used in manufacturing fumiture. Incirect labor costs (wages ot malntenance workers In factory) $ 33,500 $ 13,500 $ 21,500 Other manufacturing overhead (indludes factory insurance and praperty taxes).$10,000 $ 12,100 5 11,100 $ 35,500 $27,800 $ 18,600 $ 55,000 $ 290,000 6,600 Rent and utlities (for adrministrative offices)... Utility costs related to factory) Labor costs wages ot carpenters who build fumliture).... Accounts receivable Marketing costs Wood (used in manufacturing fumiture) Sales revenues. Accounts payable

Answer 1

Solution:
Income Statement
Outdoor Amenities
Income Statement
For the Year Ended December 31
	$$	$$
Sales Revenues		$290,000
Less: Cost of Goods Sold
Stain Cost (used in manufacturing furniture)	$13,500
Wood Cost (used in manufacturing furniture)	$58,000
Indirect Labor Costs	$21,500
Other manufacturing overhead	$10,000
Utility Costs (related to factory)	$11,100
Labor Cost	$36,500
Total Cost of Goods Sold		$150,600
Gross Profit		$139,400
Less: Operating Expenses
Salaries and Wages for administrative and sales staff	$33,500
Rent and Utilities (for administrative offices)	$12,100
Marketing Costs	$16,600
Total Operating Expenses		$62,200
Operating Income		$77,200
Note
Cost of Goods Sold includes the cost of manufacturing of furniture.
It includes
- Stand Cost –Treated as direct material since it is used in manufacturing furniture
- Wood Cost – treated as direct material since it is used in manufacturing furniture
- Indirect labor costs (other manufacturing overhead)
- Utility costs – it is related to factory hence manufacturing overhea