2-28 Income statement and schedule of cost of goods The Alderman Corporation has

Question

2-28 Income statement and schedule of cost of goods The Alderman Corporation has the following account balances (in millions manufactured For Specific Date For Year 2013 $305 115 60 Direct materials inventory, Jan. 1, 2013 Work-in-process inventory, Jan. 1, 2013 Finished goods inventory, Jan. 1, 2013 Direct materials inventory, Dec. 31, 2013 Work-in-process inventory, Dec. 31, 2013 Finished goods inventory, Dec. 31, 2013 Purchases of direct materials Direct manufacturing labor Depreciation-plant and equipment Plant supervisory salaries $19 10 70 24 6 Miscellaneous plant overhead 54 Revenues Marketing, distribution, and customer-service costs Plant supplies used Plant utilities Indirect manufacturing labor 30 925 235 10 34 68 Required Prepare an income statement and a supporting schedule of cost of goods manufactured for the year ended December 31, 2013. (For additional questions regarding these facts, see the next problem.)

Explanation / Answer

Alderman Corporation Income statement Revenues $ 925 Less: Cost of goods sold Beginning finished goods inventory $    70 Add: Cost of goods manufactured $ 627 Less: Ending finished goods inventory $    54 Cost of goods sold $ 643 Less: Marketing, distribution and customer service cost $ 235 Net income $    47 Alderman Corporation Schedule of cost of goods manufactured Direct materials Beginning raw material inventory $    19 Add: Raw material purchases $ 305 Total raw materials available $ 324 Less: Ending raw material inventory $    24 Raw material used in production $ 300 Direct material used for production $ 300 Direct labour $ 115 Manufacturing overhead Depreciation - Plant and equipment $    60 Plant supervisory salaries $      6 Misc. plant overhead $    30 Plant supplies used $    10 Plant utilities $    34 Indirect manufacturing labour $    68 Total manufacturing overhead $ 208 Total manufacturing cost $ 623 Add: Beginning work in process inventory $    10 Less: Ending work in process inventory $      6 Cost of goods manufactured $ 627

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