P13-20 Cost of goods manufactured, cost of goods sold, and income statement [LO
ID: 2348759 • Letter: P
Question
P13-20 Cost of goods manufactured, cost of goods sold, and income statement [LO 4, 5, 7]
During the month, 19,500 units of product were manufactured and 11,000 units of product were sold. On June 1, Gravois, Inc., carried no inventories. On June 30, there were no inventories for raw materials or work in process.
Prepare a traditional (absorption) income statement for Gravois, Inc., for the month of June. Assume that sales for the month were $1,035,000 and the company's effective income tax rate was 35%. (Amounts to be deducted should be indicated with minus sign. Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)
P13-20 Cost of goods manufactured, cost of goods sold, and income statement [LO 4, 5, 7]
Gravois, Inc., incurred the following costs during June:Selling expenses $ 158,375 Direct labor 283,140 Interest expense 41,065 Manufacturing overhead, actual 204,750 Raw materials used 460,980 Administrative expenses 123,000
During the month, 19,500 units of product were manufactured and 11,000 units of product were sold. On June 1, Gravois, Inc., carried no inventories. On June 30, there were no inventories for raw materials or work in process.
Requirement 4:
Prepare a traditional (absorption) income statement for Gravois, Inc., for the month of June. Assume that sales for the month were $1,035,000 and the company's effective income tax rate was 35%. (Amounts to be deducted should be indicated with minus sign. Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)
Explanation / Answer
From the directions, “Amounts to be deducted should be indicated with minus sign”
Sales
1,035,000
Cost of goods sold
-535,260
Gross profit
499,740
Selling and admin
-281,375
Operating income
218,365
Interest expense
-41,065
Income before tax
177,300
Income tax expense
-62,055
Net income
115,245
To find cost of goods sold:
283,140 direct labor
204,750 manufacturing overhead
460,980 raw materials
= 948,870
$948,870/19500 units = $48.66 per unit
$48.66 per unit*11,000 units = $535,260
cost of goods sold = $535,260
selling and admin expenses = 158,375 + 123000 = 281,375
income tax expense = 177,300*.35 = 62,055
Sales
1,035,000
Cost of goods sold
-535,260
Gross profit
499,740
Selling and admin
-281,375
Operating income
218,365
Interest expense
-41,065
Income before tax
177,300
Income tax expense
-62,055
Net income
115,245
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