Question

le tine direct materials used during the year.) E2-26A Compute Cost of Goods Manufactured and Cost of Goods Soled (Learning Objective 5) Compute the Cost of Goods Manufactured and Cost of Goods Sold for West Nautical Company for the most recent year using the amounts described next. Assume that the Raw Materials Inventory contains only direct materials Beginning End End of Year of Year of Year Raw materials inventory. Work in process inventory Finished goods inventory Purchases of direct materials.... Direct labor Indirect labor. $23,000 $25,000 Insurance on plant. Depreciation-plant building and equipment Repairs and maintenance-plant $13,400 S 3,700 . 77,000 $28,500 $35,000 $31,000 $20,000 $22,000 $74,000 Marketing expenses $86,000 General and administrative expenses.... $42,000 E2-27A Continues E2-26A: Prepare income statement (Learning Objective 5) Prepare the income statement for West Nautical Company in E2-26A for the most recent year. Assume that the company sold 34,000 units of its product at a price of $12 each during the year.

Answer 1

E2-26A
Calculation of Cost of Goods Manufactured
For Current Year
Beginning work in process inventory		35000
Plus: Manufacturing costs incurred
Direct materials used		72000	=23000+74000-25000
Direct labor		86000
Manufacturing overhead		70600	=42000+11500+13400+3700
Total manufacturing costs to account for		263600
Less: Ending work in process inventory		31000
Cost of goods manufactured (CGM)		232600
Calculation of Cost of Goods Sold
For Current Year
Beginning finished goods inventory		20000
Plus: Cost of goods manufactured		232600
Cost of goods available for sale		252600
Less: Ending finished goods inventory		22000
Cost of goods sold		230600
E2-27A
Income Statement
For Current Year
Sales revenues		408000	=34000*12
Less: Cost of goods sold		230600
Gross profit		177400
Less: Operating expenses
Marketing expenses	77000
General and administrative expenses	28500	105500
Operating income		71900