Cost of Goods Manufactured, Income Statement Norton Industries, a manufacturer of cable for the heavy construction industry, closes its books and prepares financial statements at the end of each month. The statement of cost of goods sold for April 2010 follows:
NORTON INDUSTRIES Statement of Cost of Goods Sold For the Month Ended April 30, 2010 ($000 omitted) | |
Inventory of finished goods, March 31 | $50 |
Cost of goods manufactured | 790 |
Cost of goods available for sale | $840 |
Less inventory of finished goods, April 30 | 247 |
Cost of goods sold | $593 |
Additional Information
• Of the utilities, 80 percent relates to manufacturing the cable; the remaining 20 percent relates to the sales and administrative functions.
• All rent is for the office building.
• Property taxes are assessed on the manufacturing plant.
• Of the insurance, 60 percent is related to manufacturing the cable; the remaining 40 percent is related to the sales and administrative functions.
• Depreciation expense includes the following:
Manufacturing plant | $20,000 |
Manufacturing equipment | 30,000 |
Office equipment | 4,000 |
| $54,000 |
• The company manufactured 7,825 tons of cable during May 2010.
• The inventory balances at May 31, 2010, follow:
• Direct materials inventory $23,000
• Work-in-process inventory $220,000
• Finished goods inventory $175,000
NORTON INDUSTRIES Preclosing Account Balances May 31, 2010 ($000 omitted) | |
Cash and marketable securities | $54 |
Accounts and notes receivable | 210 |
Direct materials inventory (4/30/2010) | 28 |
Work-in-process inventory (4/30/2010) | 150 |
Finished goods inventory (4/30/2010) | 247 |
Property, plant, and equipment (net) | 1,140 |
Accounts, notes, and taxes payable | 70 |
Bonds payable | 600 |
Paid-in capital | 100 |
Retained earnings | 930 |
Sales | 1,488 |
Sales discounts | 20 |
Other revenue | 2 |
Purchases of direct materials | 510 |
Direct labor | 260 |
Indirect factory labor | 90 |
Office salaries | 122 |
Sales salaries | 42 |
Utilities | 135 |
Rent | 9 |
Property tax | 60 |
Insurance | 20 |
Depreciation | 54 |
Interest expense | 6 |
Freight-in for materials purchases | 15 |
Required Based on Exhibit 3.15A, prepare the following:
1. Statement of cost of goods manufactured for Norton Industries for May 2010.
2. Income statement for Norton Industries for May 2010.
SPARTAN PRODUCTS COMPANY Statement of Cost of Goods Manufactured For the Year Ended December 31, 2010 | ||
Direct materials |
|
|
Direct materials inventory, Jan. 1, 2010 | $ 20,000 |
|
Purchases of direct materials | 100,000 |
|
Total direct materials available | $120,000 |
|
Less: Direct materials inventory, Dec. 31, 2010 | 30,000 |
|
Direct materials used |
| $ 90,000 |
Direct labor |
| 350,000 |
Factory overhead |
|
|
Heat, light, and power—Plant | 12,000 |
|
Supplies—Plant | 4,000 |
|
Property taxes—Plant | 13,000 |
|
Depreciation expense—Plant and equipment | 80,000 |
|
Indirect labor | 5,000 |
|
Supervisor’s salary—Plant | 40,000 |
|
Total factory overhead |
| 154,000 |
Total manufacturing costs |
| $594,000 |
Add: Beginning work-in-process inventory, Jan. 1, 2010 |
| 35,000 |
Total manufacturing costs to account for |
| $629,000 |
Less: Ending work-in-process, Dec. 31, 2010 |
| 25,000 |
Cost of goods manufactured |
| $604,000 |
SPARTAN PRODUCTS COMPANY Income Statement For the Year Ended December 31, 2010 | ||
Sales revenue |
| $1,000,000 |
Cost of goods sold |
|
|
Finished goods inventory, Jan. 1, 2010 | $35,000 |
|
Cost of goods manufactured | 604,000 |
|
Total goods available for sale | $639,000 |
|
Finished goods inventory, Dec. 31, 2010 | 40,000 |
|
Cost of goods sold |
| 599,000 |
Gross margin |
| $ 401,000 |
Selling and administrative expenses |
|
|
Sales representatives’ salaries | 190,000 |
|
Supplies—Administrative office | 6,000 |
|
Depreciation expense—Administrative office | 30,000 |
|
Total selling and administrative expenses |
| 226,000 |
Operating income |
| $ 175,000 |
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