grocel used in meal preparation. PROBLEM 2-24 Income Statement; Schedule of Cost
ID: 2539609 • Letter: G
Question
grocel used in meal preparation. PROBLEM 2-24 Income Statement; Schedule of Cost of Goods Manufactured [L02, LO3, LO4, LO5) Visic Corporation, a manufacturing company, produces a single product. The following informa tion has been taken from the company's production, sales, and cost records for the just com pleted year 29,000 Ending finished goods inventory in units. Sales in dollars Sales in units Costs $90,000 $480,000 $300,000 $380,000 . . Raw materials purchased Manufacturing overhead Beginning of the Year End of the Year Inventories: Raw materials Work in process Finished goods $20,000 $50,000 $0 $30,000 $40,000 The finished goods inventory is being carried at the average unit production cost for the yea The selling price of the product is $50 per unit Required 1. Prepare a schedule of cost 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 yearExplanation / Answer
Solution:
Part 1 – Schedule of Cost of Goods Manufactured
Schedule of Cost of Goods manufactured
$$
Cost of Goods Manufactured:
Beginning raw materials inventory
$20,000
Raw materials purchases
$480,000
Less: Ending raw materials inventory
-$30,000
Cost of raw materials used in production (A)
$470,000
Direct labor (B)
$90,000
Total Manufacturing Overheads (C )
$300,000
Total Manufacturing Cost (A+B+C)
$860,000
Plus: Beginning Work in Process Inventory
$50,000
Less: Ending Work in Process Inventory
-$40,000
Cost of Goods Manufactured
$870,000
Part 2(a) --- the number of units in the finished goods inventory at the end of the year
Unit Selling Price = $50per unit
Total Sales in dollars = $1,300,000
Total Unit Sold = Sales in dollars $1,300,000 / Unit Selling Price $50 = 26,000 Units
Total Production in Units = 29,000 Units
Finished Goods Inventory Ending = Total Production Units – Sold Units
= 29,000 Units – 26,000 Units
= 3,000 Units
Part 2(b) – The cost of the units in the finished goods inventory at the end of the year
Units of Ending Finished Goods Inventory = 3,000 Units
Per Unit Cost of Goods Manufactured = Total Cost of Goods Manufactured $870,000 / Units Produced 29,000 Units
= $30 per unit
Cost of Finished Goods Inventory at the end of the year = 3,000 Units x $30 = $90,000
Part 3 --- Income Statement
Income Statement for the year
$$
Sales Revenue
$1,300,000
Cost of Goods Sold:
Cost of Goods Manufactured
$870,000
Plus: Beginning Finished Goods Inventory
$0
Cost of Goods Available for Sale
$870,000
Less: Ending Finished Goods Inventory (Refer Part 2(a)
-$90,000
Cost of Goods Sold
$780,000
Gross Profit
$520,000
Less: Selling and Administrative Expenses
-$380,000
Net Operating Income
$140,000
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Schedule of Cost of Goods manufactured
$$
Cost of Goods Manufactured:
Beginning raw materials inventory
$20,000
Raw materials purchases
$480,000
Less: Ending raw materials inventory
-$30,000
Cost of raw materials used in production (A)
$470,000
Direct labor (B)
$90,000
Total Manufacturing Overheads (C )
$300,000
Total Manufacturing Cost (A+B+C)
$860,000
Plus: Beginning Work in Process Inventory
$50,000
Less: Ending Work in Process Inventory
-$40,000
Cost of Goods Manufactured
$870,000
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