I need to prepare a statement or schedule of cost of services sold and an income
ID: 2434671 • Letter: I
Question
I need to prepare a statement or schedule of cost of services sold and an income statement for a service company.for a company with the following end of year data:
Home Designs Company designs decks, gazebos, and play equipment for residential homes. The following was provided for the year ended June 30, 2011:
Direct labor $600,000
Direct material purchases 40,000
Administrative 130,000
Overhead 75,000
Selling 265,000
Beginning direct materials inventory 20,000
Beginning designs in process 14,000
Ending direct materials inventory 10,000
Ending designs in process 39,000
The average design fee is $700. There were 2,000 designs processed during the year.
Explanation / Answer
Particulars $ $ $ Beginning designs in process 14,000.00 Direct material Beginning materials 20,000.00 purchases 40,000.00 60,000.00 Ending materials 10,000.00 50,000.00 Direct labor 600,000.00 overheads 75,000.00 Total manufacturing overheads 725,000.00 739,000.00 Ending designs in process 39,000.00 Total cost of services 700,000.00 Total fees from designs (2000*700) 1,400,000.00 Less: Total cost of services 700,000.00 Gross margin 700,000.00 Administrative expenses 130,000.00 Selling expenses 265,000.00 395,000.00 Net income 305,000.00