Part 1 Shades of the Caribbean design and manufacture sun-glasses for the tourism sector. The accounting records of the business reflect the following data at June 30, 2018: Inventory 1/7/2017 30/6/2018 Raw Materials $230,000 $260,000 Factory Supplies $35,000 $24,000 Work in Progress $358,000 $213,000 Finished Goods $975,400 $585,000 Other information: Sales Revenue $5,675,000 Factory Supplies Purchased 64,000 Direct Factory Labor 792,000 Raw Materials Purchased 560,000 Plant janitorial service 37,000 Depreciation: Plant & Equipment 186,000 Total Utilities 1 481,250 Production Supervisor’s Salary 450,000 Hiring of Specialized Manufacturing Equipment 68,000 Insurance on Plant & Equipment 112,000 Delivery Vehicle Drivers’ Wages 189,000 Depreciation: Delivery Vehicle 53,850 Property Taxes 2 240,000 Administrative Wages & Salaries 850,750 Advertising Expenses 1% of Sales Revenue 1 Of the total utilities, 80% relates to manufacturing and 20% relates to general and administrative costs. 2 The property taxes should be shared: 75% manufacturing & 25% general & administrative costs (D)Prepare a schedule of cost of goods manufactured for the year ended June 30, 2018, clearly showing total manufacturing costs & total manufacturing costs to account for. (E)Prepare an income statement for the year ended June 30, 2018, clearly showing the calculation of Cost of Goods sold. List the non-production overheads in order of size starting with the largest. (F) Given that the company manufactured 1,600 sun-glasses, compute the company’s unit product cost for the year.
Reporting Cash Flows
Reporting of cash flows means a statement of cash flow which is a financial statement. A cash flow statement is prepared by gathering all the data regarding inflows and outflows of a company. The cash flow statement includes cash inflows and outflows from various activities such as operating, financing, and investment. Reporting this statement is important because it is the main financial statement of the company.
Balance Sheet
A balance sheet is an integral part of the set of financial statements of an organization that reports the assets, liabilities, equity (shareholding) capital, other short and long-term debts, along with other related items. A balance sheet is one of the most critical measures of the financial performance and position of the company, and as the name suggests, the statement must balance the assets against the liabilities and equity. The assets are what the company owns, and the liabilities represent what the company owes. Equity represents the amount invested in the business, either by the promoters of the company or by external shareholders. The total assets must match total liabilities plus equity.
Financial Statements
Financial statements are written records of an organization which provide a true and real picture of business activities. It shows the financial position and the operating performance of the company. It is prepared at the end of every financial cycle. It includes three main components that are balance sheet, income statement and cash flow statement.
Owner's Capital
Before we begin to understand what Owner’s capital is and what Equity financing is to an organization, it is important to understand some basic accounting terminologies. A double-entry bookkeeping system Normal account balances are those which are expected to have either a debit balance or a credit balance, depending on the nature of the account. An asset account will have a debit balance as normal balance because an asset is a debit account. Similarly, a liability account will have the normal balance as a credit balance because it is amount owed, representing a credit account. Equity is also said to have a credit balance as its normal balance. However, sometimes the normal balances may be reversed, often due to incorrect journal or posting entries or other accounting/ clerical errors.
Part 1
Shades of the Caribbean design and manufacture sun-glasses for the tourism sector. The accounting
records of the business reflect the following data at June 30, 2018:
Inventory 1/7/2017 30/6/2018
Raw Materials $230,000 $260,000
Factory Supplies $35,000 $24,000
Work in Progress $358,000 $213,000
Finished Goods $975,400 $585,000
Other information:
Sales Revenue $5,675,000
Factory Supplies Purchased 64,000
Direct Factory Labor 792,000
Raw Materials Purchased 560,000
Plant janitorial service 37,000
Total Utilities 1 481,250
Production Supervisor’s Salary 450,000
Hiring of Specialized Manufacturing Equipment 68,000
Insurance on Plant & Equipment 112,000
Delivery Vehicle Drivers’ Wages 189,000
Depreciation: Delivery Vehicle 53,850
Property Taxes 2 240,000
Administrative Wages & Salaries 850,750
Advertising Expenses 1% of Sales Revenue
1 Of the total utilities, 80% relates to manufacturing and 20% relates to general and administrative costs.
2 The property taxes should be shared: 75% manufacturing & 25% general & administrative costs
(D)Prepare a schedule of cost of goods manufactured for the year ended June 30, 2018, clearly
showing total
(E)Prepare an income statement for the year ended June 30, 2018, clearly showing the calculation of
Cost of Goods sold. List the non-production
(F) Given that the company manufactured 1,600 sun-glasses, compute the company’s unit product cost
for the year.
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Could you explain why the manufacturing cost of $2,815,000 was used to calculate the unit cost rather than the total manufacturing cost of goods for $2,960,000?
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