Outdoor Amenities is a manufacturer of backyard and deck fumiture. Its products

ID: 2539679 • Letter: O

Question

Outdoor Amenities is a manufacturer of backyard and deck fumiture. Its products are in high demand and it camies no inventory. Following is a list of selected account balances from its trial balance for the most recent year ended December 31 (in no particular order.) E (Click the icon to view the December 31 account balances.) Read the requirements. Requirement 1, 2, 3, and 4. To solve for the amounts required, prepare the income statement for Outdoor Amenities for the year ended December 31. Outdoor Amenities Income Statement 1 December 31 Account Balances For the Year Ended December 31 Less: Salaries and wages (for administrative and sales.stat).$ 37,400 Stain (used in manufacturing.furniture)...............$ 12,700 Indirect labor costs (wages of maintenance workers in factory) ....$ 21,300 Other manufacturing overhead (includes factory insurance and property taxes) $ 9,500 Rent and utilities (for administrative offices).... ..$ 12,000 Utility costs (related to factory) .... 3 related to factory) ............$ 11,200 Labor costs (wages of carpenters who build furniture)..$ 36,900 Accounts receivable ..$ 27,100 Marketing costs.. $ 17,300 Wood (used in manufacturing furniture)..... ......$ 57,600 Sales revenues ... ....$ 255,000 0 Requirements Print Done Using the income statement accounts in the table, calculate: 1. Cost of goods sold. Hint: Cost of goods sold can be calculated by summing the total product costs since there is no inventory. 2. Operating expenses. Hint: Operating expenses are the company's period costs. 3. Gross profit 4. Operating income Print Done

Explanation / Answer

Solution:

Income Statement

Outdoor Amenities

Income Statement

For the Year Ended December 31

Sales Revenues

$255,000

Less: Cost of Goods Sold

Stain Cost (used in manufacturing furniture)

$12,700

Wood Cost (used in manufacturing furniture)

$57,800

Indirect Labor Costs

$21,300

Other manufacturing overhead

$9,800

Utility Costs (related to factory)

$11,200

Labor Cost

$36,900

Total Cost of Goods Sold

$149,700

Gross Profit

$105,300

Less: Operating Expenses

Salaries and Wages for administrative and sales staff

$37,400

Rent and Utilities (for administrative offices)

$12,000

Marketing Costs

$17,300

Total Operating Expenses

$66,700

Operating Income

$38,600

Note

Cost of Goods Sold includes the cost of manufacturing of furniture.

It includes

- Stand Cost –Treated as direct material since it is used in manufacturing furniture

- Wood Cost – treated as direct material since it is used in manufacturing furniture

- Indirect labor costs (other manufacturing overhead)

- Utility costs – it is related to factory hence manufacturing overhead

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