Question

From Job order cost system

Question

The following data refers to Gen Corporation for the year 2005

Activities

Amount

Sales revenue Raw material inventory, 12/31/2004 Purchases of raw material in 2005 Raw material inventory, 12/31/2005 Direct labor cost incurred Selling & administrative expenses Indirect labor cost incurred Property tax on factory Depreciation on factory building Income tax expenses Indirect material used Depreciation on factory equipment Insurance on factory and equipment Utilities for factory Work in process inventory, 12/31/2004 Work-in-process inventory ,12/31/2005 Finished goods inventory, 12/31/2004 Finished goods inventory, 12/31/2005 Applied manufacturing overhead

$ 2,105,000          89,000        731,000          59,000        474,000        269,000        150,000          90,000        125,000          25,000          45,000          60,000          40,000          70,000            - 0 -          40,000          35,000          40,000        577,500

Required:

1- Prepare Gen’s schedule of cost of goods manufactured for 2005.

2- Prepare the company’s schedule of cost of goods sold for 2005. The company closes overapplied or  underapplied overhead into cost of goods sold.

3- Prepare the company’s income statement for 2005.

Answer 1

$ $ 716,000 474,000 Gen Corporation Schedule of Cost of Goods Manufactured Direct Materials: Beginning raw materials inventory 89,000 Add: Purchases of raw materials $ 731,000 Total raw materials available $ 820,000 Less: Ending raw materials inventory $ 59,000 Raw materials available for production $ 761,000 Less: Indirect materials used $ 45,000 Direct materials used Direct Labor Manufacturing overhead: Indirect labor cost 150,000 Property tax on factory 90,000 Depreciation on factory building 125,000 Indirect materials used 45,000 Depreciation on factory equipment 60,000 Insurance on factory and equipment 40,000 Utilities for factory 70,000 Manufacturing Overhead applied to work in proces Total manufacturing costs Add: Beginning work in process inventory $ $ 580,000 1,770,000 Less: Ending work in process inventory Cost of Goods manufactured $ $ $ 1,770,000 40,000 1,730,000

Gen Corporation Schedule of Cost of Goods Sold Beginning finished goods inventory Add: Cost of Goods manufactured $ Cost of goods available for sale $ Less: Ending finished goods inventory $ Unadjusted cost of goods sold Less: Overapplied overhead ($580,000 - $577,500) Adjusted cost of goods sold 35,000 1,730,000 1,765,000 40,000 $ $ $ 1,725,000 2,500 1,722,500 Gen Corporation Income Statement Sales revenue Cost of goods sold Gross margin Selling and administrative expenses Net Operating Income Less: Income tax expenses Net income $ $ $ $ $ $ $ 2,105,000 1,722,500 382,500 269,000 113,500 25,000 88,500