6. Given the following data for 2017: Administrative costs $35,000 Current liabi
ID: 2400923 • Letter: 6
Question
6. Given the following data for 2017:
Administrative costs $35,000
Current liabilities 18,000
Building depreciation (80% for plant) 25,000
Indirect materials and supplies 4,000
Sales commission expenses 12,000
Accounts receivable 15,000
Direct materials inventory, Jan 1, 2017 15,000
Direct labor 32,000
Direct materials inventory, Dec 31, 2017 16,000
Finished goods inventory, Jan 1, 2017 8,000
Finished goods inventory, Dec 31, 2017 7,000
Materials purchases 20,000
Work in process inventory, Dec 31, 2017 10,000
Supervisory and indirect labor 12,000
Accounts payable 9,000
Property taxes (80% for plant) 10,000
Utilities and power (90% for plant) 30,000
Work in process inventory, Jan 1, 2017 12,000
Sales revenue 200,000
Stockholders’ equity 75,000
Determine:
a) The cost of goods manufactured.
b) The operating income.
c) Give an example of:
** Direct cost
** Product cost
** Period cost
** Variable cost
Explanation / Answer
Cost of Goods Manufactured Schedule Direct material Direct materials inventory, Jan 1, 15000 ADD Materials purchases 20000 Raw Material Available 35000 Less Direct materials inventory, Dec 31 16000 Direct material Used 51000 Direct labor 32000 Overhead Cost Indirect materials and supplies 4000 Supervisory and indirect labor 12000 Property taxes 8000 Utilities and power 27000 Building depreciation 20000 Total Overhead Cost 71000 Total Manufacturing Cost 154000 Cost of Goods Manufactured Work in process inventory, Jan 1 12000 Total Manufacturing Cost 154000 Work in process inventory, Dec 31, 10000 Cost of Goods Manufactured 156000 Cost of Goods Manufactured 156000 Finished goods inventory, Jan 1 8000 Cost of Goods Available For Sale 164000 Less Finished goods inventory, Dec 7000 Cost of Goods sold 157000 Income Statement Sales 200000 Cost of Goods sold 157000 Gross Profit 43000 Expenses Building depreciation 5000 Sales commission expenses 12000 Property taxes 2000 Utilities and power 3000 22000 Operating income 21000 c) Give an example of: Direct cost Direct material Product cost Direct labor Period cost Sales commission expenses Variable cost Direct material
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