Santana Rey, owner of Business Solutions, decides to diversify her business by a

Question

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture. Required 1. Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect. 2. Prepare a schedule of cost of goods manufactured for Business Solutions for the month ended January 31, 2018. Direct materials: $2,200 Factory overhead: $490 Direct labor: $900 Beginning work in process: none (December 31, 2017) Ending work in process: $540 (January 31, 2018) Beginning finished goods inventory: none (December 31, 2017) Ending finished goods inventory: $350 (January 31, 2018) 3. Prepare the cost of goods sold section of a partial income statement for Business Solutions for the month ended January 31, 2018. Complete this question by entering your answers in the tabs below.

Explanation / Answer

Cost by Cost by Behaviour Traceability 1 Monthly flat fee to clean workshop fixed indirect 2 laminate coverings for desktops Variable direct 3 taxes on assembly workshops fixed indirect 4 Glue to assemble workstation component parts Variable indirect 5 Wages to desk assembler Variable direct 6 Electricity for workshop Variable indirect 7 Depreciation on tools fixed indirect Schedule of cost of goods manufactured Direct materials 2,200 direct labor 900 Factory overhead 490 total manufacturing costs 3,590 Beginning work in process 0 total cost of goods in process 3,590 Ending work in process 540 cost of goods manufactured 3,050 Partial income statement cost of goods sold beginning finished goods inventory 0 cost of goods manufactured 3,050 cost of goods available for sale 3,050 ending finished goods inventory 350 cost of goods sold 2,700

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