Cost of Goods Manusactured, etc Presented Below is the information from the reco
ID: 2372215 • Letter: C
Question
Cost of Goods Manusactured, etc
Presented Below is the information from the records of Britton Companyfor March:
Purchases:
Direct Materials $9,000,000
Indirect Materials 200,000
Office Supplies 420,000
Sales 36,000,000
Salaries and Benefits:
Selling and Administratve 4,000,000
Direct Mnufacturing Labor 6,000,000
Rent * 4,000,000
Utilities * 1,200,000
Advertising 700,000
Invenories March 1 March 31
Direct Materials $4,400,000 $1,600,000
Indirect Materials 500,000 600,000
Office supplies 150,000 180,000
Finished Goods 24,000,000 16,000,000
* Of thee osts,60 percent are assigned to manufacturing and 40 percent to selling and administrative.
Required:
1- Prepare a schedule of cot of goods manufactured.
2. Prepare an income statement for the month
3. Compute the prime costs, conversion costs, and indirect manufacturing costs.
SHOW All Work
Explanation / Answer
Britton Company Cost of Goods Manufactured Schedule for the month of March Direct materials: =================================================================================================================================== Beginning inventory $ 4,400,000 ============================================================================================================================================= Purchases of direct materials 9,000,000 ================================================================================================================================= Cost of direct materials available $13,400,000 ================================================================================================================================= Ending inventory 1,600,000 =================================================================================================================================== Direct materials used $11,800,000 ================================================================================================================================== Direct manufacturing labor 6,000,000 ================================================================================================================================ Manufacturing overhead: Rent (60%) $ 2,400,000 ====================================================================================================================================== Utilities (60%) 720,000 ================================================================================================================================= Indirect materials ($200,000 + $500,000 - $600,000) 100,000 3,220,000 ============================================================================================================================== Cost of goods manufactured $21,020,000 ============================================================================================================================================ Britton Company Income Statement for the month of March =============================================================================================================================== Sales $36,000,000 ================================================================================================================================================================================================ Cost of goods sold: Beginning inventory $24,000,000 ================================================================================================================================= Cost of goods manufactured 21,020,000 ============================================================================================================================== Cost of goods available for sale $45,020,000 ==================================================================================================================================================================================================== Ending inventory 16,000,000 29,020,000 ========================================================================== Gross margin $ 6,980,000 ======================================================================================================================================= Other costs: Supplies ($420,000 + $150,000 -$180,000) $390,000 ==================================================================================================================================== Selling and administrative salaries 4,000,000 ================================================================================================================================== Rent (40%) 1,600,000 ======================================================================= Utilities (40%) 480,000 ================================================================================================================================= Advertising 700,000 7,170,000 ========================================================================== Operating Income $ (190,000) =========================================================================================================================================== c. Prime costs = $11,800,000 + $6,000,000 = $17,800,000 ================================================================================================================================ Conversion costs = $6,000,000 + $3,220,000 = $9,220,000 ================================================================================================================================= Indirect manufacturing costs = $3,220,000