Jay Manufacturing, Inc. received the following monthly reports for December 2014

Question

Jay Manufacturing, Inc. received the following monthly reports for December 2014 from its newly hired accountant, who quit after only a week on the job. Note: The cost of goods sold of $44,500 is incorrect Raw materials (beginning): S 16,700 Raw materials purchased: $6500 Jay Manufacturing, Inc. Cost of Goods Sold Schedule Finished Goods Inventory (beginning) Work-in-Process Inventory (beginning) $15,000 3,000 18, 000 Total Current Manufacturing Costs: Salaries and Wages: Direct Manufacturing Labor Indirect Manufacturing Labor Sales salaries and wages Administrative $5,000 2,000 4,000 3.000 14,000 Other Manufacturing supplies Manufacturing depreciation Insurance on showroom Miscellaneous factory overhead Total Work- In- Process Ending Work-In-process and Finished Goods Inventory Cost of Goods sold 1,500 3,500 1,000 6.500 12,500 26.500 44,500 44,500 Jay Manufacturing, Inc. Income Statement $100,000 20,000 80,000 Sales Less direct materials used in production Gross profit Less other expenses: Cost of goods sold Office supplies Manufacturing Utilities Office Utilities Net Income $44,500 250 1,000 46,000 34,000 Required: Prepare the schedule of cost of goods manufactured and cost of goods sold in good form for the month ended on December 31, 2009. Also prepare and income statement for the month.

Explanation / Answer

1) A) Cost of Goods Manufactured Schedule - For the Month Ended December 31, 2009

Direct Materials

Beginning Direct Materials

$16,700

Plus: Purchases of Direct Materials

$6,500

Direct Materials Available for Use

$23,200

Ending Direct Materials

$3,200

Direct Materials Used in Production

$20,000

Direct labour

$5,000

Manufacturing Overhead

Amortization -Factory

$3,500

Utilities

$1,000

Supplies

$1,500

Indirect Manufacturing Labour

$2,000

Miscellaneous factory overhead

$6,500

Total Manufacturing Overhead

$14,500

Total Manufacturing Costs Incurred in 2009

$39,500

Plus: Beginning Work In Process Inventory

$3,000

Total Manufacturing Costs to Account For

$42,500

Minus: Ending Work In Process Inventory

$0

Cost of Goods Manufactured

$42,500

B) Schedule of Cost of Goods Sold - For the Month Ended December 31, 2009

Beginning Finished Goods Inventory

S 15000

Plus: Cost of Goods Manufactured

$42,500

Cost of Goods Available for Sale

$57,500

Minus Ending Finished Goods Inventory

$0

COGS

$57,500

C) Income Statement - For the Month Ended December 31, 2009

Sales

$100000

COGS

$57,500

Gross Margin

$42,500

Office Supplies

$250

Office Utilities

$250

Sales salaries and wages

$4,000

Administrative Salaries and wages

$3,000

Insurance on Showroom

$1,000

Total Expenses

$8,500

Net Income

$34,000

PART-2)

Prime Costs = DM + DL = $20,000 + $5,000 = $25,000

Conversion Costs = DL+MOH = $5,000 + $14,500 = $19,500

Direct Materials

Beginning Direct Materials

$16,700

Plus: Purchases of Direct Materials

$6,500

Direct Materials Available for Use

$23,200

Ending Direct Materials

$3,200

Direct Materials Used in Production

$20,000

Direct labour

$5,000

Manufacturing Overhead

Amortization -Factory

$3,500

Utilities

$1,000

Supplies

$1,500

Indirect Manufacturing Labour

$2,000

Miscellaneous factory overhead

$6,500

Total Manufacturing Overhead

$14,500

Total Manufacturing Costs Incurred in 2009

$39,500

Plus: Beginning Work In Process Inventory

$3,000

Total Manufacturing Costs to Account For

$42,500

Minus: Ending Work In Process Inventory

$0

Cost of Goods Manufactured

$42,500

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