Preparing a Schedule of Cost of Finished Goods Manufactured, Cost of Goods Sold
ID: 2337501 • Letter: P
Question
Preparing a Schedule of Cost of Finished Goods Manufactured, Cost of Goods Sold Schedule, and an Income Statement. Listed below is information related to Danbury Co’s manufacturing activities for the month of July 2016. Ending Balance Beginning Balance Materials Inventory $7,500 $ 6,000 Goods in Process Inventory 11,000 2,000 Finished Goods Inventory 10,000 9,000 During July 2016, Danbury Company purchased $20,000 of raw materials and incurred direct labor costs of $14,160. The company applies overhead at a rate of 50% of direct labor cost. General, selling and administrative costs amounted to $6,550, and the company sold 10,372 units of its product at a price of $5 each.
A) Prepare Danbury’s schedule of cost of finished goods manufactured for July 2016.
B) Determine Danbury’s cost of goods sold during July 2016.
C) Prepare Danbury’s income statement for the month ended July 31, 2018 (ignoring interest expense and income taxes)
Explanation / Answer
Beginning Ending Schedule of Finished Goods Manufactured Material 6000 7500 For the Month of July 2016 WIP 2000 11000 Opening Raw Material 6000 FG 9000 10000 Add: Direct Material Purchase 20000 Total Available Material 26000 Direct Material 20000 Less: Closing Raw Material 7500 Direct Labor 14160 Raw Material Consumed 18500 OH 7080 (14160*50%) Direct Labor 14160 Applied Overhead 7080 Total Current Cost 39740 Opening WIP 2000 Less: Closing WIP 11000 Total Cost of Goods Manufactured 30740 Schedule of Cost of Goods Sold For the Month of July 2016 Opening Finished Goods 9000 Add: Cost of Goods Manuafctured 30740 Less: Closing Finished Goods 10000 Cost of Goods Sold 29740 Income Statement For the Month of July 2016 Sales 51860 (10372*5) Less: Cost of Goods Sold 29740 Gross Contribution 22120 Less: Other Expense General Admin & Selling 6550 Net Income 15570