Answer and Explanation:
The calculation of the cost of goods manufactured is detailed below:
Statement of Cost of Goods Manufactured
Details Amount
Direct Materials
Initial Inventory a $40,000
Purchases b $290,000
Direct Materials Available $330,000
(c = a + b)
Ending Direct Materials Inventory d $10,000
Direct Materials Used $320,000
(e = c - d)
Direct Labor $398,000
($683,000 - $285,000 - $320,000)
Factory Overhead $285,000
Total Manufacturing Costs $683,000
Add: Beginning WIP Inventory $42,000
($690,000 + $35,000 - $683,000)
Less: Ending WIP Inventory $35,000
Cost of Goods Manufactured $690,000
b and c The preparation of the cost of goods sold and income statement for the year is outlined below:
Schedule of Cost of Goods Sold
Income Statement for the Year
Details Amount
Sales $915,000
($270,000 + $645,000)
Cost of Goods Sold
Beginning Inventory of
Finished Products $50,000
Cost of Goods Manufactured $690,000
Cost of Goods Available
for Sale $740,000
Less: Ending Finished Goods
Inventory $80,000
($740,000 - $660,000)
Cost of Goods Sold
(Unadjusted) $660,000
Overapplied Overhead $15,000
($285,000 - $270,000)
Cost of Goods Sold (Adjusted) $645,000
($660,000 - $15,000)
Gross Profit $270,000
($30,000 + $100,000 + $140,000)
Less: Selling & Administrative Expenses
Selling Expenses $140,000
Administrative Expenses $100,000 $240,000
Operating Income $30,000
