https://jnj.brightspotcdn.com/88/3f/b666368546bcab9fd520594a6016/2017-0310-ar-bo
ID: 2607518 • Letter: H
Question
https://jnj.brightspotcdn.com/88/3f/b666368546bcab9fd520594a6016/2017-0310-ar-bookmarked.pdf <--- link to the annual report
http://financials.morningstar.com/income-statement/is.html?t=JNJ <----- link to income statement
What categories of inventory does the company show in its inventories footnote under “Notes to Consolidated Financial Statements”? Using the income statement and inventory information from the footnote, calculate the cost of finished goods manufactured for the most recent year. What elements of manufacturing overhead can you identify using the annual report? http://financials.morningstar.com/income-statement/is.html?t=JNJ
Explanation / Answer
1. What categories of inventory does the company show in its inventories footnote under “Notes to Consolidated Financial Statements”?
In its inventories footnote under :Notes to Consolidated Financial STatements", the company divides its inventories under the following categories -
Raw Materials and Supplies
Goods in process
Finished Goods
2. Using the income statement and inventory information from the footnote, calculate the cost of finished goods manufactured for the most recent year.
As per the details of the footnote under the Notes to Consolidated Statements and the Income Statement the cost of finished goods manufactured for the most recent year i.e. 2016 is =
Cost of goods sold + Closing Inventory of Finished Goods - Opening Inventory of Finished Goods
= 21,685 + 5,007 - 4,876
= $ 21,816 (in millions)
3. What elements of manufacturing overhead can you identify using the annual report?
From studying the annual report the following manufacturing overheads can be identified -
Purchases of various raw materials
Labour Charges
Power, fuel and electricity
Factory Manager Salaries
Depreciation of machinery used
Transporrtation Charges like Freight, Octroi
Legal Expenses
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