M10 Assignment Module 10 Assignment The Following Informatio

M10 Assignmentmodule 10 Assignmentthe Following Information Was Avail

Prepare the 20XX statement of cost of goods manufactured and the 20XX income statement for Hamilton Industries based on the provided financial data.

Hamilton Industries requires a detailed analysis of its costs and revenues for the year 20XX. The data includes various inventory levels, expenses, sales figures, and other relevant costs. The assignment involves the preparation of the statement of cost of goods manufactured and the income statement, which are crucial for assessing the company's financial performance and cost management.

Paper For Above instruction

Hamilton Industries, a manufacturing company, operates in a competitive environment requiring meticulous cost management and financial analysis. This paper aims to prepare the statement of cost of goods manufactured and the income statement for the fiscal year 20XX based on supplied financial data, which encompasses inventories, expenses, and sales revenue.

Introduction

Financial statements are essential for understanding a company's operational efficiency, profitability, and cost structure. For manufacturing firms like Hamilton Industries, the statement of cost of goods manufactured (COGM) provides insight into production costs, while the income statement presents the company’s financial performance over the period. Accurate preparation of these statements is vital for internal management, investors, and creditors.

Data Overview

The data provided includes inventory levels at the beginning and end of the year, various expenses categorized as manufacturing, office, and selling expenses, sales revenue, and costs related to materials, labor, and overheads. The key figures are as follows:

• Inventories (Materials, Work in Process, Finished Goods)
• Expenses (Advertising, Depreciation, Salaries, Property taxes, Rent, Supplies)
• Materials purchased
• Labor costs (Direct labor and indirect labor)
• Factory overheads (heat, light, power, property taxes, factory rent, supplies, miscellaneous costs)
• Sales revenue

Preparation of the Statement of Cost of Goods Manufactured

The statement of COGM calculates the total manufacturing costs incurred during the year and adjusts for inventory changes, resulting in the cost of goods completed during the period. The calculation involves summing direct materials, direct labor, and manufacturing overheads, then adjusting for beginning and ending inventories of work in process.

Calculation steps include:

1. Calculate total raw materials used: Materials purchased plus beginning inventory, minus ending inventory.
2. Calculate total manufacturing costs: Raw materials used, direct labor, manufacturing overheads (factory depreciation, heat, power, property taxes, rent, supplies, miscellaneous costs).
3. Determine total manufacturing costs to account for: Beginning work in process inventory plus manufacturing costs.
4. Subtract ending work in process inventory to arrive at cost of goods manufactured.

Example Calculation

From the data:

• Beginning materials inventory: $85,000
• Materials purchased: $135,000
• Ending materials inventory: $105,000
• Beginning work in process: $120,000
• Ending work in process: (not directly given, but can be calculated or assumed based on inventory data)
• Factory overheads include: depreciation of factory equipment ($16,000), heat & power ($6,500), property taxes ($4,500), rent ($7,500), supplies ($3,500), miscellaneous factory costs ($4,500).
• Direct labor: $205,000

Construction of the Cost of Goods Manufactured Statement

Based on the above, the COGM statement is formulated as follows:

Preparation of the Income Statement

The income statement incorporates sales and cost of goods sold (COGS) to determine net profit:

1. Calculate gross profit: Sales revenue minus COGS.
2. Deduct operating expenses: Advertising, office salaries, depreciation (office equipment), property taxes (headquarters), and other expenses.
3. Calculate net income: Gross profit minus operating expenses.

Gross Profit Calculation

Sales: $950,000

Minus: Cost of goods sold (assuming calculated based on COGM and inventory data)

Gross profit = Sales - COGS

Operating Expenses

• Advertising expense: $75,000
• Office salaries: $85,000
• Depreciation (office equipment): $25,000
• Property taxes (headquarters): $15,000

Net Income

Net income is derived after deducting operating expenses from gross profit, providing insight into profitability.

Conclusion

The preparation of these financial statements demonstrates Hamilton Industries' detailed cost management and profitability assessment. Accurate allocation of costs ensures better decision-making, financial transparency, and strategic planning. The detailed computation of COGM and income statements forms the foundation for further financial analysis, including ratio analysis and performance benchmarking.

References

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