Visic corporation, a manufacturing company produces a single product. The follow
ID: 2387072 • Letter: V
Question
Visic corporation, a manufacturing company produces a single product. The following information has been taken from the companys production, sales and cost records for the just completed year:
Production in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .29,000
Sales in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .?
Ending finished goods inventory in units . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .?
Sales in dollars . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .$1,300,000
Costs:
Direct labour . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .90,000
Raw materials purchased . . . . . . . . . . . . . . . . . . . . . . . . .480,000
Manufacturing overhead..............................................300,000
Selling and administrative expenses . . . . . . . . . . . . . . . . 380,000
Beginning of the Year End of the Year
Inventories:
Raw materials . . . . . . . . . . . . . . . . . . $20,000 $30,000(end of year)
Work in process . . . . . . . . . . . . . . . . . 50,000 40,000(end of year)
Finished goods . . . . . . . . . . . . . . . . . . $0 ?
The finished goods inventory is being carried at the average unit production cost for the year. The selling price of the product is $50 per unit..
Required:
1. Prepare a schedule of goods manufactured for the year.
2. Compute the following:
a. The number of units in the finished goods inventory at the end of the year
b. The cost of the units in the finished goods inventory at the end of the year
3. Prepare an income statement for the year.
Explanation / Answer
1. Prepare a schedule of goods manufactured for the year. For this ,first we shoud know the consumption of raw material. Opening balance 20000 Add:Raw material purchased 480000 Consumption of material(Balancing figure) $470000 Less: Clsoing stock 30000 Opening balance 20000 Add:Raw material purchased 480000 Consumption of material(Balancing figure) $470000 Less: Clsoing stock 30000Calculating the cost of goods manfctured : Consumption of material 410000 Direct Labor 90000 Over heads 300000 Cost of goods manfctured $860000 2) a. The number of units in the finished goods inventory at the end of the year Production in units 29000 less: Sales during the year 26000 closing stock (units) 3000 Production in units 29000 less: Sales during the year 26000 closing stock (units) 3000 Production in units b) The cost of the units in the finished goods inventory at the end of the year Closing inventory value = $30000/10 =$10 3. Prepare an income statement for the year Income statement Sales 1300000 less: Consumption of material 410000 Direct Labor 90000 Over heads 300000 500000 less: Selling adminstrative Expenses 380000 Operating Income 120000 Opening balance 20000 Add:Raw material purchased 480000 Consumption of material(Balancing figure) $470000 Less: Clsoing stock 30000
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