Chapter 18, Problem 18.16EX

(a)

To determine

Cost of goods sold:

Cost of goods sold is the accumulate total of all direct cost incurred in manufacturing the goods or the products which has been sold during a period. Cost of goods sold involves direct material, direct labor, and manufacturing overheads.

Net income:

Net income is the total earnings generated by the company. Net income is calculated by deducting the operating expenses from the earnings (Profit).

$\boxed{\text{Net}\text{income = Gross profit – operating expenses}}$

Gross Profit:

Gross Profit is the difference between the net sales, and the cost of goods sold. Gross profit usually appears on the income statement of the company.

The cost of goods sold for the month ended October 31, 2016.

(b)

To determine

The gross profit and net income.