information for the year ended December 31, 2010: Sales 110,000 Direct materials

Question

information for the year ended December 31, 2010:

Sales 110,000

Direct materials used 20,800

Indirect production costs-fixed 10,400

Indirect production costs-variable 6,600

Direct laborNfixed 12,300 Direct labor-variable 22,300

Selling expenses-fixed 33,040

Selling expenses-variable 33,440

Finished goods inventory, January 1, 2010 12,000

Finished goods inventory, December 31, 2010 22,000

Work in process inventory, January 1, 2010 0

Work in process inventory, December 31, 2010 0

Requirements:

A) Compute the Cost of Goods Manufactured for the year ended December 31, 2010.

B) Compute the Cost of Goods Sold for the year ended December 31, 2010.

C) Compute the Net Income(Loss) for the year ended December 31, 2010.

Explanation / Answer

Hi,

Please find the answer as follows:

Part A: Cost of Goods Manufactured

Answer is 72400

Part B: Cost of Goods Sold

Cost of Goods Sold = 72400 (Cost of Goods Manufactured) + 12000 (Opening Finished Goods Inventory) - 22000 (Closing Finished Goods Inventory) = 62400

Answer is 62400

Part C:

Net Income (Loss) = 110000 (Sales) - 62400 (Cost of Goods Sold) - 66480 (Selling Expenses) = (18880)

Answer is Loss of 18880

Thanks.

Amount Direct Material Used 20800 Direct Labor 34600 Indirect Production Costs 17000 Total Manufacturing Costs 72400 Add Opening WIP 0 Less Closing WIP 0 Cost of Goods Manufactured 72400

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