Flow of Costs and Income Statement Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $959,850 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $2,239,650 advertising the product through these infomercials. In addition, the company incurred $960,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8. Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows: Hardened steel blanks (used for knife shaft and blade) $2.00 Wood (for handle) 0.70 Packaging 0.70 The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 1,680 knives. After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.30 per unit. The knives are sold to stores. Each store is given promotional materials such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.3 per knife. Total completed production was 711,000 units during the year. Other information is as follows: Number of customers (stores) 30,200 Number of knives sold 604,400 Wholesale price (to store) per knife $18 Factory overhead cost is applied to jobs at the rate of $840 per stamping machine hour after the knife blanks are stamped. There were an additional 177,750 stamped knives, handles, and cases waiting to be assembled on December 31, 20Y8. In your computations, if required, round interim per unit costs to two decimal places. Required: 1.  Prepare an annual income statement for the Kitchen Ninja knife series. Ginocera Inc. Income Statement For the Year Ended December 31, 20Y8       $fill in the blank d1a7b009bfd701a_2       fill in the blank d1a7b009bfd701a_4       $fill in the blank d1a7b009bfd701a_6 Selling expenses:         $fill in the blank d1a7b009bfd701a_8       fill in the blank d1a7b009bfd701a_10       fill in the blank d1a7b009bfd701a_12     Total selling expenses   $fill in the blank d1a7b009bfd701a_13   Administrative expenses:           fill in the blank d1a7b009bfd701a_15   Total operating expenses     fill in the blank d1a7b009bfd701a_16 Income from operations     $fill in the blank d1a7b009bfd701a_17 2.  Determine the balances in the work in process and finished goods inventories for the Kitchen Ninja knife series on December 31, 20Y8. Finished Goods $fill in the blank f5e1df002f80fe3_1 Work in Process $fill in the blank f5e1df002f80fe3_2

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
icon
Related questions
Question

Flow of Costs and Income Statement

Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $959,850 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $2,239,650 advertising the product through these infomercials. In addition, the company incurred $960,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8.

Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows:

Hardened steel blanks (used for knife shaft and blade) $2.00
Wood (for handle) 0.70
Packaging 0.70

The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 1,680 knives.

After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.30 per unit.

The knives are sold to stores. Each store is given promotional materials such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.3 per knife.

Total completed production was 711,000 units during the year. Other information is as follows:

Number of customers (stores) 30,200
Number of knives sold 604,400
Wholesale price (to store) per knife $18

Factory overhead cost is applied to jobs at the rate of $840 per stamping machine hour after the knife blanks are stamped. There were an additional 177,750 stamped knives, handles, and cases waiting to be assembled on December 31, 20Y8.

In your computations, if required, round interim per unit costs to two decimal places.

Required:

1.  Prepare an annual income statement for the Kitchen Ninja knife series.

Ginocera Inc.
Income Statement
For the Year Ended December 31, 20Y8
      $fill in the blank d1a7b009bfd701a_2
      fill in the blank d1a7b009bfd701a_4
      $fill in the blank d1a7b009bfd701a_6
Selling expenses:      
  $fill in the blank d1a7b009bfd701a_8    
  fill in the blank d1a7b009bfd701a_10    
  fill in the blank d1a7b009bfd701a_12    
Total selling expenses   $fill in the blank d1a7b009bfd701a_13  
Administrative expenses:      
    fill in the blank d1a7b009bfd701a_15  
Total operating expenses     fill in the blank d1a7b009bfd701a_16
Income from operations     $fill in the blank d1a7b009bfd701a_17

2.  Determine the balances in the work in process and finished goods inventories for the Kitchen Ninja knife series on December 31, 20Y8.

Finished Goods $fill in the blank f5e1df002f80fe3_1
Work in Process $fill in the blank f5e1df002f80fe3_2
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 2 images

Blurred answer
Knowledge Booster
Asset replacement decision
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.
Similar questions
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education