Question

Exercise 6 (Cost of goods manufactured) Consider the following account balances (in thousands) for the Canseco Company Beginning End of of 20X120X1 Direct materials inventory Work in process inventory Finished goods inventory Purchases of direct materials Direct manufacturing labor Indirect manufacturing labor Plant insurance Depreciation plant building and equipment Repairs and maintenance- plant Marketing, distribution, and customer- service costs General and administrative costs P22,000 P26,000 21,000 20,000 18,000 23,000 75,000 25,000 15,000 9,000 11,000 4,000 93,000 29,000 Required. 1. Prepare a schedule of cost of goods manufactured for 20XI 2. Revenues in 20X1 were P300 million. Prepare the 20XI income statement.

Answer 1

Solution:-

1. Prepare a schedule of cost of goods manufactures for 20X1:-

Canseco Company
Schedule Cost of Goods Manufactured
Year Ended December 31, 20X1 (in thousands)
Direct materials:
Beginning inventory, Jan. 1, 20X1	22,000
Purchase cost of direct materials	75,000
Cost of direct materials available for use	97,000
Ending inventory, Dec. 31, 20X1	26,000
Direct materials used		71,000
Direct manufacturing labor		25,000
Indirect manufacturing costs:
Indirect manufacturing labor	15,000
Plant insurance	9,000
Depreciation - plant, building, and equipment	11,000
Repairs and maintenance - plant	4,000
Total indirect manufacturing costs		39,000
Manufacturing costs incurred during 20X1		135,000
Beginning work-in-process inventory, Jan 1, 20X1		21,000
Total manufacturing costs to account for		156,000
Ending work-in-process inventory, Dec. 31, 20X1		20,000
Cost of goods manufactured		136,000

2. Revenues in 20X1 were P300 million. Prepare the 20X1 income statement:-

Canseco Company
Income statement
Year Ended December 31, 20X1 (in thousands)
Revenues		300,000
Cost of goods sold:
Beginning finished goods, Jan. 1, 20X1	18,000
Cost of goods manufactured	136,000
Cost of goods available for sale	154,000
Ending finished goods, Dec. 31 20X1	23,000
Cost of goods sold		131,000
Gross margin		169,000
Operating costs:
Marketing, distribution, and customer-service costs	93,000
General and administrative costs	29,000
Total operating costs		122,000
Operating income/(loss)		47,000

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