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San Ysidro Company manufactures hiking equipment. The company’s administrative and manufacturing operations share the company’s only building. Eighty percent of the building is used for manufacturing and the remainder is used for administrative activities. Indirect labor is 8 percent of direct labor.
The cost accountant at San Ysidro has compiled the following information for the year ended December 31:
| Administrative salaries | $ | 176,900 |
| Attorney fees to settle zoning dispute | 28,100 | |
| Building depreciation (manufacturing portion only) | 229,700 | |
| Cost of goods manufactured | 3,565,700 | |
| Direct materials inventory, December 31 | 292,300 | |
| Direct materials purchased during the year | 1,284,000 | |
| Direct materials used | 1,323,000 | |
| Distribution costs | 5,900 | |
| Finished goods inventory, January 1 | 278,000 | |
| Finished goods inventory, December 31 | 318,000 | |
| Insurance (on plant machinery) | 67,800 | |
| Maintenance (on plant machinery) | 43,100 | |
| Marketing costs | 131,300 | |
| Other plant costs | 111,600 | |
| Plant utilities | 128,100 | |
| Sales revenue | 5,739,700 | |
| Taxes on manufacturing property | 47,400 | |
| Total (direct and indirect) labor | 1,609,200 | |
| Work-in-process inventory, January 1 | 90,500 | |
| Work-in-process inventory, December 31 | 84,700 | |
| Prepare a cost of goods manufactured and sold statement and an income statement. | ||
Expert Answer
| Cost of Goods manufactured Schedule | |||
| Work-in-process inventory, January 1 | 90,500 | ||
| Manufacturing cost] | |||
| Direct Material | |||
| Direct materials inventory, January 1 (1615300-331300) | 331,300 | ||
| Direct materials purchased during the year | 1,284,000 | ||
| Direct material avalable (1323000+292300) | 1,615,300 | ||
| Less:Direct materials inventory, December 31 | 292,300 | ||
| Direct materials used | 1,323,000 | ||
| Direct Labor (1609200/108*100) | 1,490,000 | ||
| Manufacturing overhed | |||
| Indirect Labor (1490000*8%) | 119200 | ||
| Building depreciation | 229,700 | ||
| Insurance | 67,800 | ||
| Maintenance | 43,100 | ||
| Other plant costs | 111,600 | ||
| Plant utilities | 128,100 | ||
| Taxes on manufacturing property | 47,400 | ||
| Total Manufacturing overhead | 746900 | ||
| Total manufacturing cost | 3,559,900 | ||
| Total cost of work in process during the year | 3,650,400 | ||
| Less: Work-in-process inventory, December 31 | 84,700 | ||
| Cost of Goods manufactured | 3,565,700 | ||
| Schedule of Cost of Good sold | |||
| Finished goods inventory, January 1 | 278,000 | ||
| Cost of goods manufactured | 3,565,700 | ||
| Cost of goods available for sale | 3,843,700 | ||
| Less: Finished goods inventory, December 31 | 318,000 | ||
| Cost of Good sold | 3,525,700 | ||
| Income statement | |||
| Sales revenue | 5,739,700 | ||
| Less: cost oF good sold | 3,525,700 | ||
| Gross profit | 2,214,000 | ||
| Less: selling and Administrative | |||
| Marketing costs | 131,300 | ||
| Distribution costs | 5,900 | ||
| Administrative salaries | 176,900 | ||
| Attorney fees to settle zoning dispute | 28,100 | ||
| Total selling & administrative expenses | 342,200 | ||
| Net Income | 1,871,800 | ||
