Problem

Financial Statement Elements: ManufacturerThe following selected information was extracted...

Financial Statement Elements: Manufacturer

The following selected information was extracted from the 20x1 accounting records of Lone Oak Products:

Raw material purchases

$175,000

Direct labor

254,000

Indirect labor

109,000

Selling and administrative salaries

133,000

Building depreciation

80,000

Other selling and administrative expenses

195,000

Other factory costs

344,000

sales revenue ($130perunil)

1,495,000

*Seventy five percent of the company's building was devoted to production activities; the remaining 25 percent was used for selling and administrative functions.

Inventory data:

 

January1

December 31

Raw material

$ 15,800

$18,200

Work in process

35,700

62,100

Finished goods*

111 ,1 00

97,900

*The January 1andOecember 31finished-goodsinventoryconsistedof 1,350 units and 1,190 units. respectively.

Required:

1. Calculate Lone Oak's manufacturing overhead for the year.

2. Calculate. Lone Oak's cost of goods manufactured.

3. Compute the company's cost of goods sold.

4. Determine net income for 20x1, assuming a 30% income tax rate.

5. Determine the number of completed units manufactured during the year.

6. Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change: indirect labor is $115,000 and other factory costs amount to $516,000.

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