Question

The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The following information (in $000s) appears in the accounting records for last year: Administrative costs $ 1,653 Building and machine depreciation (75% of this amount is for factory) 800 Building utilities (90% of this amount is for factory) 1,310 Direct labor 835 Direct materials inventory, December 31 16 Direct materials inventory, January 1 10 Direct materials purchases 3,640 Factory supervision 495 Finished goods inventory, December 31 66 Finished goods inventory, January 1 57 Indirect factory labor 918 Indirect materials and supplies 691 Marketing costs 879 Property taxes on building (85% of this amount is for factory) 1,000 Sales revenue 12,945 Work-in-process inventory, December 31 28 Work-in-process inventory, January 1 34 Required: Prepare an income statement with a supporting cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)

Answer 1

Solution:

Schedule of Cost of goods sold
Particulars	Details	Amount (In '000)
Beginning Raw material inventory	$10.00
Direct material purchases	$3,640.00
Ending direct material inventory	-$16.00
Direct material used		$3,634.00
Direct labor		$835.00
Manufacturing overhead:
Building and machine depreciation	$600.00
Building Utilities	$1,179.00
Factory supervision	$495.00
Indirect factory labor	$918.00
Indirect material and supplies	$691.00
Property taxes on building	$850.00
Total Manufacturing overhead		$4,733.00
Total manufacturing cost incurred		$9,202.00
Add: Opening Work In Process		$34.00
Less: Ending Work In Process		$28.00
Cost of goods manufactured		$9,208.00
Add: Beginning finished goods inventory		$57.00
Less: Ending Finished goods inventory		$66.00
Cost of goods sold		$9,199.00

Income Statement
Particulars	Amount (In '000)
Sales revenue	$12,945.00
Cost of goods sold	$9,199.00
Gross Profit	$3,746.00
Selling and administrative expenses:
Administrative Cost	$1,653.00
Building and machine depreciation	$200.00
Building Utilities	$131.00
Marketing costs	$879.00
Property taxes on building	$150.00
Net Income	$733.00