The following selected information was extracted from the 20x1 accounting record
ID: 2425409 • Letter: T
Question
The following selected information was extracted from the 20x1 accounting records of Lone Oak Products: 'Seventy-five percent of the company's building was devoted to production activities; the remaining 25 percent was used for selling and administrative functions. Inventory data: 'The January 1 and December 31 finished-goods inventory consisted of 1,350 units and 1,190 units, respectively. Required: Calculate Lone Oak's manufacturing overhead for the year. Calculate Lone Oak's cost of goods manufactured. Compute the company's cost of goods sold. Determine net income for 20x1, assuming a 30% income tax rate. Determine the number of completed units manufactured during the year.Explanation / Answer
1
Calculation of Lone Oak's Manufacturing Overhead for the year:
Indirect labor
$ 109,000.00
Building Depreciation = 80000*75% =
$ 60,000.00
Other Factory Costs
$ 344,000.00
Lone Oak's Manufacturing Overhead for the year =
$ 513,000.00
2
Calculation of Lone Oak's Cost of Goods Manufactured for the year:
Direct Material :
Raw Material Purchase for the year
$ 175,000.00
Add: Raw Material Inventory Jan. 1, 20x1
$ 15,800.00
Less: Raw Material Inventory Dec. 31, 20x1
$ (18,200.00)
Total Direct Material used
$ 172,600.00
Direct Labor
$ 254,000.00
Manufacturing Overhead
$ 513,000.00
Total Manufacturing Costs
$ 939,600.00
Add: Work in Process inventory, Jan 1, 20x1
$ 35,700.00
Less: Work in Process inventory, Dec 31, 20x1
$ (62,100.00)
Total Cost of Goods Manufactured
$ 913,200.00
3
Calculation of Lone Oak's Cost of Goods sold for the year:
Total Cost of Goods Manufactured
$ 913,200.00
Add: Finished Goods inventory, Jan 1, 20x1
$ 111,100.00
Less: Finished Goods inventory, Dec 31, 20x1
$ (97,900.00)
Lone Oak's Cost of Goods sold for the year =
$ 926,400.00
4
Calculation of Net income:
Sales Revenue
$ 1,495,000.00
Less: Cost of Goods sold
$ (926,400.00)
Gross Revenue
$ 568,600.00
Less: Selling and administrative Expenses:
Selling and administrative Salaries
$ 133,000.00
Building Depreciation = 80000*25% =
$ 20,000.00
Other Selling and administrative expenses
$ 195,000.00
Total Selling and administrative Expenses
$ 348,000.00
Income before tax
$ 220,600.00
Less: Tax @ 30%
$ (66,180.00)
Net Income
$ 154,420.00
1
Calculation of Lone Oak's Manufacturing Overhead for the year:
Indirect labor
$ 109,000.00
Building Depreciation = 80000*75% =
$ 60,000.00
Other Factory Costs
$ 344,000.00
Lone Oak's Manufacturing Overhead for the year =
$ 513,000.00
2
Calculation of Lone Oak's Cost of Goods Manufactured for the year:
Direct Material :
Raw Material Purchase for the year
$ 175,000.00
Add: Raw Material Inventory Jan. 1, 20x1
$ 15,800.00
Less: Raw Material Inventory Dec. 31, 20x1
$ (18,200.00)
Total Direct Material used
$ 172,600.00
Direct Labor
$ 254,000.00
Manufacturing Overhead
$ 513,000.00
Total Manufacturing Costs
$ 939,600.00
Add: Work in Process inventory, Jan 1, 20x1
$ 35,700.00
Less: Work in Process inventory, Dec 31, 20x1
$ (62,100.00)
Total Cost of Goods Manufactured
$ 913,200.00
3
Calculation of Lone Oak's Cost of Goods sold for the year:
Total Cost of Goods Manufactured
$ 913,200.00
Add: Finished Goods inventory, Jan 1, 20x1
$ 111,100.00
Less: Finished Goods inventory, Dec 31, 20x1
$ (97,900.00)
Lone Oak's Cost of Goods sold for the year =
$ 926,400.00
4
Calculation of Net income:
Sales Revenue
$ 1,495,000.00
Less: Cost of Goods sold
$ (926,400.00)
Gross Revenue
$ 568,600.00
Less: Selling and administrative Expenses:
Selling and administrative Salaries
$ 133,000.00
Building Depreciation = 80000*25% =
$ 20,000.00
Other Selling and administrative expenses
$ 195,000.00
Total Selling and administrative Expenses
$ 348,000.00
Income before tax
$ 220,600.00
Less: Tax @ 30%
$ (66,180.00)
Net Income
$ 154,420.00