Question

The administrative offices and manufacturing plant of Billings Tool & Die share the same building. The...

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).)

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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
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