Question

Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December:

	On Company		Off Company
Materials inventory, December 1	$82,580		$111,480
Materials inventory, December 31	(a)		125,970
Materials purchased	209,750		250,830
Cost of direct materials used in production	221,310		(a)
Direct labor	311,330		(b)
Factory overhead	96,620		124,860
Total manufacturing costs incurred in December	(b)		721,280
Total manufacturing costs	787,810		787,810
Work in process inventory, December 1	158,550		268,670
Work in process inventory, December 31	133,780		(c)
Cost of goods manufactured	(c)		714,590
Finished goods inventory, December 1	139,560		124,860
Finished goods inventory, December 31	146,170		(d)
Sales	1,217,230		1,114,800
Cost of goods sold	(d)		721,280
Gross profit	(e)		(e)
Operating expenses	158,550		(f)
Net income	(f)		247,490

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
			$
Direct materials:
	$
	$
		$
Total manufacturing costs incurred during December
Total manufacturing costs			$
			$

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
		$
Cost of goods sold:
	$
	$
		$
		$

Answer 1

Answer 1.

On Company:

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
$221,310 = $82,580 + $209,750 - Materials inventory, December 31
Materials inventory, December 31 = $71,020

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
Total manufacturing costs incurred in December = $221,310 + $311,330 + $96,620
Total manufacturing costs incurred in December = $629,260

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
Cost of goods manufactured = $787,810 - $133,780
Cost of goods manufactured = $654,030

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
Cost of goods sold = $139,560 + $654,030 - $146,170
Cost of goods sold = $647,420

Gross profit = Sales - Cost of goods sold
Gross profit = $1,217,230 - $647,420
Gross profit = $569,810

Net income = Gross profit - Operating expenses
Net income = $569,810 - $158,550
Net income = $411,260

Off Company:

Cost of direct materials used in production = Materials inventory, December 1 + Materials purchased - Materials inventory, December 31
Cost of direct materials used in production = $111,480 + $250,830 - $125,970
Cost of direct materials used in production = $236,340

Total manufacturing costs incurred in December = Cost of direct materials used in production + Direct labor + Factory overhead
$721,280 = $236,340 + Direct labor + $124,860
Direct labor = $360,080

Cost of goods manufactured = Total manufacturing costs - Work in process inventory, December 31
$714,590 = $787,810 - Work in process inventory, December 31
Work in process inventory, December 31 = $73,220

Cost of goods sold = Finished goods inventory, December 1 + Cost of goods manufactured - Finished goods inventory, December 31
$721,280 = $124,860 + $714,590 - Finished goods inventory, December 31
Finished goods inventory, December 31 = $118,170

Gross profit = Sales - Cost of goods sold
Gross profit = $1,114,800 - $721,280
Gross profit = $393,520

Net income = Gross profit - Operating expenses
$247,490 = $393,520 - Operating expenses
Operating expenses = $146,030

Answer 2.

$ 158,550 On Company Statement of Cost of Goods Manufactured For the Month Ended December 31 Work in process inventory, December 1 Direct materials: Materials inventory, December 1 $ 82,580 Purchases $ 209,750 Cost of materials available for use $ 292,330 Less materials inventory, December 31 $ 71,020 Cost of direct materials used in production Direct labor Factory overhead Total manufacturing costs incurred during December Total manufacturing costs Less work in process inventory, December 31 Cost of goods manufactured $ 221,310 $ 311,330 $ 96,620 $ $ $ $ 629,260 787,810 133,780 654,030

Answer 3.

$ 1,217,230 On Company Income Statement For the Month Ended December 31 Sales Cost of goods sold: Finished goods inventory, December 1 $ 139,560 Cost of goods manufactured $ 654,030 Cost of finished goods available for sale $ 793,590 Less finished goods inventory, December 31 $ 146,170 Cost of goods sold Gross profit Operating expenses Net income $ 647,420 $ 569,810 $ 158,550 $ 411,260