How does the format of the income statement for a manufacturing concern differ from the income statement of a merchandising business?
How does the format of the income statement for a manufacturing concern differ from the income statement of a merchandising business?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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How does the format of the income statement for a manufacturing concern differ from the income statement of a merchandising business?
Transcribed Image Text:Part 1
Canine Nutritionists is a manufacturer of grains for dogs. The following information pertains to operations during
the 2021 calendar year.
Inventory Data:
Raw Materials
Indirect Materials
1/1/2021 Purchases 31/12/2021
$750,000 $4,330,000
55,000 320,000
924,000
1,142,600
Work in Progress
Finished Goods
The following additional information is also available:
Sales Revenue
Direct Factory Labor
Indirect Factory Labor
Total Depreciation ¹
Total Utilities 2
Distribution & Customer Service Costs
Insurance on Plant & Equipment
Property Taxes 3
Administrative Wages & Salaries
Advertising Expenses
Sales Commission
n/a
n/a
$807,000
71,500
814,750
1,720,200
$14,776,000
4,371,000
1,232,250
400,000
525,000
76,800
585,000
90,000
1,076,000
57,700
5% of Sales Revenue
1 Of the total depreciation, 80% relates to factory plant & equipment and 20% relates to general and
administrative costs.
2 Of the total utilities, 75% relates to manufacturing and 25% relates to general and administrative costs.
3 The property taxes should be shared: 85% manufacturing & 15% general & administrative costs.
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