Selected Account Balances Of Manufacturing Company Appear Be
Selected account balances of Manufacturing Company appear below for 20XX
The assignment requires analyzing financial data of a manufacturing company for the year 20XX. Tasks include calculating the direct materials used in production, total manufacturing costs incurred, preparing a schedule for the cost of goods manufactured, calculating the cost of goods sold, and producing an income statement. Support your answers with detailed formulas, step-by-step calculations, and formatted schedules. Use standard currency formats and avoid partial or extraneous information, ensuring each answer starts on a new page. Present your solutions in APA or Chicago style, either DOCX or PDF format.
Paper For Above instruction
The analysis of a manufacturing company's financial data provides insights into various aspects of cost management, production efficiency, and profitability. Using the provided account balances for the year 20XX, we will perform detailed calculations to understand the company's manufacturing costs and financial position through specific computations such as direct materials used, manufacturing costs, cost of goods manufactured, cost of goods sold, and the overall income statement.
1. Calculation of Direct Materials Used in Production
Direct materials used in production is calculated as follows:
Formula:
Direct Materials Used = Beginning Raw Materials Inventory + Raw Material Purchases - Ending Raw Materials Inventory
Given Data:
- Beginning Raw Materials Inventory = $46,000
- Raw Material Purchases = $90,000
- Ending Raw Materials Inventory = $26,000
Calculation:
Direct Materials Used = $46,000 + $90,000 - $26,000 = $110,000
Therefore, the company used $110,000 worth of direct materials during the year.
2. Calculation of Total Manufacturing Costs Incurred
Total manufacturing costs comprise direct materials used, direct labor, and manufacturing overhead.
Formula:
Manufacturing Costs = Direct Materials Used + Direct Labour + Manufacturing Overhead
Given Data:
- Direct Materials Used = $110,000 (from previous calculation)
- Direct Labour = $55,000
- Factory supervisory salaries = $18,000
- Factory insurance = $12,000
- Factory depreciation expense = $22,000
- Indirect labour = $11,000
Additional manufacturing overhead includes factory supervisory salaries, insurance, depreciation, and indirect labour:
Manufacturing Overhead = $18,000 + $12,000 + $22,000 + $11,000 = $63,000
Calculation:
Total Manufacturing Costs = $110,000 + $55,000 + $63,000 = $228,000
The total manufacturing costs incurred during 20XX amounted to $228,000.
3. Schedule for the Cost of Goods Manufactured (COGM)
The COGM schedule consolidates beginning inventory, manufacturing costs, and ending inventory.
Schedule Format:
| Direct Materials Used | Direct Labour | Manufacturing Overhead | Total Manufacturing Costs | Beginning Work in Process Inventory | Less: Ending Work in Process Inventory | Cost of Goods Manufactured |
|---|---|---|---|---|---|---|
| $110,000 | $55,000 | $63,000 | $228,000 | $30,000 | $35,000 | Calculate below |
Calculation of COGM:
Sum of total manufacturing costs + Beginning WIP Inventory - Ending WIP Inventory
COGM = $228,000 + $30,000 - $35,000 = $223,000
Hence, the cost of goods manufactured during 20XX was $223,000.
4. Calculation of Cost of Goods Sold (COGS)
COGS is derived as:
Formula:
Beginning Finished Goods Inventory + COGM - Ending Finished Goods Inventory = COGS
Given Data:
- Beginning Finished Goods Inventory = $20,000
- Ending Finished Goods Inventory = $26,000
Calculation:
COGS = $20,000 + $223,000 - $26,000 = $217,000
The cost of goods sold for 20XX is $217,000.
5. Income Statement Preparation
The income statement summarizes revenues and expenses to determine net income.
Revenues:
- Sales = $340,000
- Less: Sales returns and allowances = $15,000
Net Sales:
$340,000 - $15,000 = $325,000
Cost of Goods Sold:
$217,000
Gross Profit:
$325,000 - $217,000 = $108,000
Operating Expenses (including administrative expenses and selling expenses):
- Administrative Expenses = $27,000
- Selling Expenses = $35,000
- Factory Supervisory Salaries = $18,000
- Factory Insurance = $12,000
- Factory Depreciation = $22,000
- Indirect Labour = $11,000
Total Operating Expenses = $27,000 + $35,000 + $18,000 + $12,000 + $22,000 + $11,000 = $125,000
Net Operating Income (Loss):
$108,000 - $125,000 = -$17,000
Assuming no tax considerations, the net loss for the period is $17,000.
References
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