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Exercise 8:

Using the following data, compute (1) the cost of goods manufactured and (2) the cost of goods sold for both Canyon and Crossings Company.

                                                                    Canyon Co    Crossing Co

Beginning finished goods inventory                           14,000$                 18,450$

Beginning goods in process inventory                       16,500                   21,950

Beginning raw materials inventory                               9,250                   11,000

Rental cost on factory equipment                              29,000                   24,750

Direct labor                                                              21,000                  37,000

Ending finished goods inventory                                19,650                   15,300

Ending goods in process inventory                            24,000                   18,000

Ending raw material inventory                                     7,300                     9,200

Factory utilities                                                         11,000                   14,000

Factory supplies used                                               10,200                     5,200

General and Administration expense                          23,000                   45,000

Indirect labor                                                              3,250                     9,660

Repair factory equipment                                            6,780                     3,500

Raw materials purchases                                           35,000                   54,000

Sales salaries                                                            52,000                   48,000

Answer

                                                              CANYON COMPANY

1 )      Cost of goods manufactured

Direct Material

Add: Beginning raw material inventory............................... 9,250

......... Raw material purchase.............................................. 35,000

Less: Ending raw material inventory.................................. (7,300)

Total: Direct Material........................................................................ 36,950

Direct Labor...................................................................................... 21,000

Manufacturing Overhead

......... Rental cost on factory equipment............................. 29,000

......... Factory utilities ......................................................... 11,000

......... Factory supplies used................................................ 10,200

......... Indirect labor............................................................... 3,250

......... Repair factory equipment............................................ 6,780

Total: Manufacturing Overhead........................................................ 60,230

Total:  Manufacturing Cost........................................................................... 118,180

Add: Beginning goods in process inventory................................................... 16,500

Less: Ending goods in process inventory..................................................... (24,000)

Total: Cost of goods manufactured.................................................................................... 110,680

2 )      Cost of goods sold

Add: Beginning finish goods inventory......................................................... 14,000

......... Cost of goods manufactured............................................................... 110,680

Less: Ending finish goods inventory............................................................ (19,650)

Total: Cost of goods sold..................................................................................................... 105,030

CROSSING COMANY

1)      Cost of goods manufactured

Add: Beginning raw material inventory............................. 11,000

         Raw material purchase.............................................. 54,000

Less: Ending raw material inventory.................................. (9,200)

Total: Direct Material........................................................................ 55,800

Direct Labor...................................................................................... 37,000

Manufacturing Overhead

Rental cost on factory equipment............................. 24,750

Factory utilities ......................................................... 14,000

Factory supplies used.................................................. 5,200

Indirect labor............................................................... 9,660

Repair factory equipment............................................ 3,500

Total: Manufacturing Overhead........................................................ 57,110

Total:  Manufacturing Cost........................................................................... 149,910

Add: Beginning goods in process inventory................................................... 21,950

Less: Ending goods in process inventory..................................................... (18,000)

Total: Cost of goods manufactured............................................................................... 153,860

2)      Cost of goods sold

Add: Beginning finish goods inventory......................................................... 18,450

......... Cost of goods manufactured............................................................... 153,860

Less: Ending finish goods inventory............................................................ (15,300)

Total: Cost of goods sold................................................................................................ 157,010

       

Exercise 9:

Give the following selected account balance of Randa Company, prepare its manufacturing statement and income statement in proper form for the year ended on December 31,2009 . Include a listing of the individual overhead account balance in this statement.

Sales…………………………………………  $1,252,000

Raw material inventory, Dec 31,2009...............         39,000

Goods in process inventory, Dec 31, 2009.......         55,900

Finished goods inventory, Dec 31, 2009..........         64,750

Raw material purchases……………………          177,600

Direct labor………………………………..            49,000

Repair factory equipment …………………               7,250

Rent cost of factory building ……………..               59,000

Advertising expense ……………………..               96,000

General and Administrative expenses…….              131,300

Raw material inventory, Dec 31,2010                       44,700

Good in process inventory ,Dec 31,2010                  43,500

Finished good inventory , Dec,31, 2010                   69,300

  

Answer

RANDA COMPANY

Manufacturing Statement and Income Statement

December 31, 2009

Direct Material

Add: Beginning raw material inventory Dec 31, 2009................ 39,000

          Raw material purchase................................................. 177,600

Less: Ending raw material inventory Dec 31, 2010.................. (44,700)

Total: Direct Material............................................................................... 171,900

Direct Labor............................................................................................... 49,000

Manufacturing Overhead

         Repair factory equipment..................................................... 7,250

         Rent cost of factory building.............................................. 59,000

Total: Manufacturing Overhead................................................................. 66,250

Total: Manufactured Statement..................................................................................... 287,150

Cost of goods manufacturing

Add: Beginning goods in process inventory Dec 31, 2009.........   55,900

         Manufacturing Statement................................................. 287,150

Less: Ending goods in process inventory Dec 31, 2010............  (43,500)

Total: Cost of goods manufacturing........................................................ 299,550

Cost of goods sold

Add: Beginning finish goods inventory Dec 31, 2009.............................. 64,750

         Cost of goods manufacturing......................................................... 299,550

Less: Ending finish goods inventory Dec 31, 2010 ................................ (69,300)

Total: Cost of goods sold......................................................................... 295,000

Cross margin

Add: Sales............................................................................................. 1,252,000

Less: Cost of goods sold.......................................................................  (295,000)

Total: Cross margin..................................................................................................... 957,000

Selling and Administrative

Add: Advertising Expense........................................................................  96,000

         General and Administrative Expense.............................................  131,300

Total: Selling and Administrative ............................................................................ (227,300)

Net Income.................................................................................................................... 729,700

Exercise 11:

The following information is available for the first month of operations of Asian Arts Inc, a manufacturer of craft items:

Sales                                                                $710,000

Cross Profits                                                      220,000

Indirect materials                                                  25,000

Indirect labor                                                       15,000

Other factory overhead                                        12,000

Materials purchased                                           180,000

Total manufacturing costs for the period             530,000

Materials inventory, end of period                       20,000

Using the above information determines the following missing amounts:

a.                   Cost of goods sold

b.                  Direct materials cost

c.                   Direct labor cost.

                                                Answer

a  )       Cost of goods sold

Add: Sales................................................................................................ 710,000

Less: Cross Profits................................................................................. (220,000)

Total: Cost of goods sold.............................................................................................. 490,000

b )     Direct material cost

Add: Beginning raw material inventory.............................................................. 0

         Raw material purchased.................................................................180,000

Less: Ending raw material inventory....................................................... (20,000)

Total: Direct material cost.......................................................................................... 160,000

c  )      Direct labor cost

Add: Manufacturing cost......................................................................... 530,000

Less: Direct material cost....................................................................... (160,000)

Manufacturing overhead

         Indirect material.................................................................. 25,000

         Indirect labor...................................................................... 15,000

         Other factory overhead....................................................... 12,000

Total: Manufacturing overhead............................................................... (52,000)

Total: Direct labor cost.............................................................................................. 318,000

Exercise 12:

Last month Cyber Games, a computer game retailer, had total sales of $1,450,000 selling expenses of $210,000, and administrative expense of $180,000. The company had beginning merchandise inventory of $240,000, purchased additional merchandise inventory for $950,000, and had ending merchandise inventory of $170,000.

       Required

          Prepare an income statement for the company for the month.

 Answer
CYBER GAME COMPANY

Income Statement

Sales........................................................................................ 1,450,000

Cost of goods sold

Add: Net purchase.................................................. 950,000

         Beginning inventory...................................... 240,000

Less: Ending inventory......................................... (170,000)

Total Cost of goods sold...................................................... (1,020,000)

Total: Cross margin.................................................................................. 430,000

Selling and Administrative

Add: Selling expanse`................................................................ 210,000

         Administrative expense.................................................... 180,000

Total: Selling and Administrative.......................................................... (390,000)

Net Income..................................................................................................................... 40,000

Exercise 16:

Kelser corporation is a manufacturing company. Completed the following amount:

	DM Purchased	DM Beginning	DM Ending	DM Used
A	48,000	10,000	9,000	49,000
B	91,000	12,000	15,000	88,000
C	130,000	20,000	95,000	55,000

	DM Used	DL Used	MOH Used	Total Mfg. Cost
A	49,000	61,000	50,000	160,000
B	88,000	88,000	120,00	296,000
C	55,000	150,000	95,000	300,000

	Total Mfg. Cost	WIP Beginning Inventory	WIP Ending Inventory	Total Cost of Goods Manufactured
A	160,000	120,000	86,000	194,000
B	296,000	120,000	98,000	318,000
C	300,000	470,000	55,000	715,000

	Total Cost of Goods Manufactured	Finished goods Beginning Inventory	Finished goods Ending Inventory	Total Cost of Sold
A	194,000	90,000	85,000	199,000
B	318,000	42,000	18,000	342,000
C	715,000	70,000	85,000	700,000