The following cost and inventory data are taken from the accounting records of E
ID: 2350791 • Letter: T
Question
The following cost and inventory data are taken from the accounting records of Eccles Company for the year just completed:
Sales ......................................................................................... $643,000
Direct labor cost ........................................................................... $90,000
Raw material purchases .............................................................. $132,000
Selling expenses ......................................................................... $100,000
Administrative expenses ............................................................... $43,000
Manufacturing overhead applied to work in process....................... $210,000
Actual manufacturing overhead costs .......................................... $220,000
Inventories:
Beginning of
Year
End of Year
Raw materials ............................................... $8,000 $10,000
Work in process ............................................ $5,000 $20,000
Finished goods ............................................. $70,000 $25,000
Required:
1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.
2. Prepare a schedule of cost of goods sold.
3. Prepare an income statement.
Explanation / Answer
Required:
1. Prepare a schedule of cost of goods manufactured. Assume all raw materials used in production were direct materials.
Direct materials:
Beginning inventory
8,000
Purchases
132,000
Available for use
140,000
Ending inventory
10,000
Direct materials used
130,000
Direct labor
90,000
Manufacturing overhead
210,000
Total manufacturing costs
430,000
Beginning work in process
5,000
Total costs to account for
435,000
Ending work in process
20,0000
Cost of goods manufactured
415,000
2. Prepare a schedule of cost of goods sold.
Beginning finished goods inventory
70,000
Cost of goods manufactured
415,000
Cost of goods available for sale
485,000
Ending finished goods inventory
25,000
Unadjusted cost of goods sold
460,000
Add underapplied overhead
10,000
Cost of goods sold
470,000
3. Prepare an income statement.
Revenues
643,000
Cost of goods sold
470,000
Gross margin
173,000
Operating costs
Selling expenses
100,000
Administrative expenses
43,000
143,000
Operating income
30,000
Direct materials:
Beginning inventory
8,000
Purchases
132,000
Available for use
140,000
Ending inventory
10,000
Direct materials used
130,000
Direct labor
90,000
Manufacturing overhead
210,000
Total manufacturing costs
430,000
Beginning work in process
5,000
Total costs to account for
435,000
Ending work in process
20,0000
Cost of goods manufactured
415,000
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.