Question

J & G Electronics

Inventory	Jan 1, 2018	Dec 31, 2018
Raw Materials	$260,000	$230,000
WOrk In Progress	$332,300	$218,000
Finished Goods	$1,075,200	$615,000

Other information

Sales Revenue	$5,765,000
Factory Supplies	$45,000
Direct Factory Labour	$735,000
Special Design Cost	$15,000
Raw materials Purchased	$540,000
Plant Jantorial Service	$52,000
Depreciation: Plant & Equipment	$165,000
Total Utilities	$550,000
Plant Supervisory Salary	$480,000
Property Taxes	$300,000
R&D for Graphic Designs	$70,500
Total Insurance	$160,000
Delivery Truck Driver's Salary	$125,000
Depreciation Delivery Truck	$52,000
Administrative Wages and Salary	$850,150
ADVERTISING Expense	1% of revenue

Of the total utilities, 70% relates to manufacturing and 30% relates to general and administrative cost

The property taxes should be shared 60% manufacturing and 40% general and administrative costs

Of the total insurance 75% relates to plant and equipment and 25% relates to administrative cost.

1. Prepare an income statement for the year clearing showing the calculation of cost of goods sold and list te non-production overheads in order of size starting with the largest.

Answer 1

$5,765,000 [Ref: Workings] $3,306,500 $2,458,500 J & G Electronics Income Statement For the Year Ended Dec 31, 2018 Sales Revenue Cost of Goods Sold: Finished Goods, January 1 $1,075,200 Add: Cost of Goods Manufactured $2,846,300 Cost of Goods Available for Sale $3,921,500 Less: Finished Goods, December 31 $615,000 Cost of Goods Sold Gross Profit Operating Expenses: Administrative Wages and Salary $850,150 Utilities (General Admin. Cost) $165,000 Delivery Truck Driver's Salary $125,000 Property Taxes (General Admin. Cost) $120,000 R&D for Graphic Designs $70,500 ADVERTISING Expense $57,650 Depreciation Delivery Truck $52,000 Insurance expense (General Admin. Cost) $40,000 Special Design Cost $15,000 Total Operating costs Operating income (Loss) [$550,000 x 30%] [$300,000 x 40%] [1% of revenue --> $ x 1%] ($160,000 x 25%] $1,495,300 $963,200

$570,000 $735,000 Workings: J & G Electronics Schedule of Cost of Goods Manufactured For the Year Ended Dec 31, 2018 Direct Materials used: Direct Materials, January 1 $260,000 Add: Purchases of direct materials $540,000 Total Direct Materials available $800,000 Less: Direct Materials, December 31 $230,000 Direct Materials used in the production Direct factory labor Indirect manufacturing costs: Plant supervisor's salary $480,000 Utilities (Factory) $385,000 Property Taxes (Factory) $180,000 Depreciation: Plant & Equipment $165,000 Insurance cost (Factory) $120,000 Plant Jantorial Service $52,000 Factory Supplies $45,000 Total indirect manufacturing costs Total Manufacturing Cost incurred during the year Add: Work in Process, January 1 Total Manufacturing Cost to Account for Less: Work in Process, December 31 Cost of Goods Manufactured [$550,000 x 70%] [$300,000 x 60%] [$160,000 x 75%] $1,427,000 $2,732,000 $332,300 $3,064,300 $218,000 $2,846,300