Activity 3-COGM,COGS,IS PDF

Preview

Summary

Chapter 2: Cost Concepts
Activity 3-COGM,COGS,IS...

Description

GEI Management Accounting Course 2019-2020 1st semester Group A1 # NIUB ________________

Activity 3-Suggested solution Schedules of Cost of Goods Manufactured, Cost of Goods Sold and Income Statement EXERCISE 1-Prepare a Schedule of Cost of Goods Manufactured and Cost of Goods Sold The following cost and inventory data are taken from the accounting records of Mason Company for the year just completed:

Required: 1) Prepare a schedule of cost of goods manufactured. 2) Prepare the cost of goods sold section of Mason Company’s income statement for the year.

1

SUGGESTED SOLUTION 1. Mason Company Schedule of Cost of Goods Manufactured Direct materials: Beginning raw materials inventory .................. $ 7.000 Add: Purchases of raw materials ..................... 118.000 Raw materials available for use....................... 125.000 Deduct: Ending raw materials inventory .......... 15.000 Raw materials used in production ...........$110.000 Direct labor ...................................................... 70.000 Manufacturing overhead ................................... 80.000 Total manufacturing costs........................$260.000 Add: Beginning work in process inventory.......... 10.000 270.000 Deduct: Ending work in process inventory ......... 5.000 Cost of goods manufactured .....................$265.000

2. The cost of goods sold section of Mason Company’s income statement: Beginning finished goods inventory ............ $ 20.000 Add: Cost of goods manufactured .............. 265.000 Goods available for sale ............................. 285.000 Deduct: Ending finished goods inventory .... 35.000 Cost of goods sold................................. $250.000

GEI Management Accounting Course 2019-2020 1st semester Group A1 # NIUB ________________

Activity 3-Suggested solution Schedules of Cost of Goods Manufactured, Cost of Goods Sold and Income Statement EXERCISE 2-Prepare a Schedule of Cost of Goods Manufactured, Cost of goods Sold and Income Statement The following information has been taken from the accounting records of Klear-Seal Corporation for last year:

Management wants these data organized in a better format so that financial statements can be prepared for the year. Required: 1. Prepare a schedule of cost of goods manufactured. Assume raw materials consists entirely of direct materials. 2. Compute the cost of goods sold schedule 3. Prepare an income statement.

3

SUGGESTED SOLUTION (1).

Klear-Seal Company Schedule of Cost of Goods Manufactured For the year ended December 31, 2012 Expressed in $

Direct materials: Raw material inventory, Jan 1 Add: purchases of raw material Raw material available for use Less: raw material inventory, Dec 31 Raw material used Direct labor Manufacturing overhead: -Indirect labor -Supplies, factory -Utilities, factory -Insurance, factory -Depreciation, factory -Maintenance, factory Total manufacturing overhead Total manufacturing costs Add: work in process inventory, Jan 1 Less: work in process inventory, Dec 31 Cost of Goods Manufactured

90.000 750.000 840.000 (60.000) 780.000 150.000 300.000 15.000 36.000 40.000 162.000 87.000 640.000 1.570.000 180.000 (100.000) 1.650.000

(2).

Klear-Seal Company Schedule of Cost of Goods Sold For the year ended December 31, 2012 Expressed in $ Finished goods inventory, Jan 1 260.000 Add: cost of goods manufactured 1.650.000 Goods available for use 1.910.000 Less: finished goods inventory, Dec 31 (210.000) Cost of Goods Sold 1.700.000 (3).

Klear-Seal Company Income Statement For the year ended December 31, 2012 Expressed in$ Sales 2.500.000 Less: cost of goods sold (1.700.000) Gross margin 800.000 Less: selling& admin costs -Selling expenses 140.000 -Admin expenses 270.000 Total selling& admin costs (410.000) Net operating income 390.000...