- Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process. 1. To determine:- Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Question

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Answer 1

Question

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

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Answer 2

Question

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

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Answer 3

Question

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

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Answer 4

Question

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

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Answer 5

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

Answer 6

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

Answer 7

Chapter 18, Problem 3BPSB

To determine

Introduction:-

Cost of goods manufactured refers to the cost allocated to the units which have either been produced or is in the process of being produced. Main elements of cost of goods manufactured are direct materials used, direct labour, manufacturing overheads and work in process.

1. To determine:-

Here, in the given problem we are required to ascertain the cost of goods manufactured for Best Bikes for the year ended December 31, 2017.

Answer 8

Expert Solution

Answer to Problem 3BPSB

Solution:-

The cost of goods manufactured for Best Bikes for the year ended December 31, 2017 is $18, 16,995.

Answer 9

Expert Solution

Answer 10

Expert Solution

Answer 11

Expert Solution

Answer 12

Explanation of Solution

Explanation:-

Following is the schedule of cost of goods manufactured for Best Bikes:-

Particulars	Amount

Direct materials
Beginning raw materials inventory (A)	40375
Purchases of raw materials (B)	894375
Ending raw materials inventory (C)	70430
Direct materials used in production (D=A+B-C)	864320

Direct labour (E)	562500

Manufacturing overheads (F) NOTE 1	391775

Total Manufacturing costs (G=D+E+F)	1818595

Beginning work in process inventory (H)	12500
Ending work in process inventory (I)	14100

Cost of goods manufactured during the year (G+H-I)	$1816995

Note 1:- Manufacturing overheads

Depreciation expense (Factory equipment)	35400
factory supervision	121500
factory supplies used	6060
Factory utilities	37500
indirect labour	59000
Miscellaneous production costs	8440
Rent expense (factory building)	93500
Maintenance expense (factory equipment)	30375
Total manufacturing overheads	391775

Answer 13

Conclusion

Conclusion:-

Hence, this cost of goods manufactured figure is then used to calculate the cost of goods sold and then the net income.

Answer 14

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

Answer 15

To determine

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Answer 16

Expert Solution

Answer to Problem 3BPSB

Solution:-

Best Bike income statement shows a net income of $2497865.

Answer 17

Expert Solution

Answer 18

Expert Solution

Answer 19

Expert Solution

Answer 20

Explanation of Solution

Explanation:-

Following is the income statement of best bike for the year ended December 31, 2017:-

Particulars	Amount

Sales		4942625

LESS Cost of Goods sold
Cost of goods manufactured	1816995
ADD Opening finished goods	177200
LESS Ending finished good	141750	1852445

LESS Selling expenses NOTE 2		352675
LESS General and administrative expenses NOTE 3		102940
Income before income tax expense		2634565
LESS Income tax expense		136700
Net Income		$2497865

Note 2:- Selling expenses

Advertising expense	20250
Depreciation expense (Selling equipment)	10125
Rent expense (Selling space)	27000
Sales salaries expense	295300
Total selling expenses	352675

Note 3:- General and administrative expenses

Depreciation expense (Office equipment)	8440
Rent expense (Office space)	23625
Office salaries expense	70875
Total general and administrative expense	102940

Answer 21

Conclusion

Conclusion:-

Hence, income statement is prepared by deducting from the sales figure the cost of goods sold, selling expenses and general and administrative expenses.

Answer 22

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

Answer 23

To determine

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Answer 24

Expert Solution

Answer to Problem 3BPSB

Solution:-

Here, the inventory turnover is 11.62 times and days sales in inventory (raw materials) is 13.87 days and days sales in inventory (finished goods) are 27.93 days.

Answer 25

Expert Solution

Answer 26

Expert Solution

Answer 27

Expert Solution

Answer 28

Explanation of Solution

Explanation:-

Inventory turnover is defined as ratio wherein it is shown as to how many times an organisation’s inventory is sold and replaces over the reporting period.

$I n v e n t o r y t u r n o v e r = C O G S \div A v e r a g e I n v e n t o r y$

$A v e r a g e i n v e n t o r y = (177200 + 141750) \div 2$

$A v e r a g e i n v e n t o r y = $ 159475$

$I n v e n t o r y t u r n o v e r = 1852445 \div 159475$

$= 11.62 t i m e s$

Days’ sales in inventory are defined as the time period taken by an organisation to convert its inventory into sales.

$D a y s^{'} s a l e s i n i n v e n t o r y = 365 \times (e n d i n g i n v e n t o r y \div C O G S)$

$D a y s s a l e s i n i n v e n t o r y (r a w m a t e r i l a s i n v e n t o r y) = 365 \times (70430 \div 1852445)$

$= 13.87 d a y s^{'} s a l e s i n r a w m a t e r i a l i n v e n t o r y$

$D a y s s a l e s i n i n v e n t o r y (F i n i s h e d g o o d s i n v e n t o r y) = 365 \times (141750 \div 1852445)$

$= 27.93 d a y s^{'} s a l e s i n f i n i s h e d g o o d s i n v e n t o r y$

Answer 29

Conclusion

Conclusion:-

Hence, inventory turnover is used by an organisation to determine as to the amount of inventory they buy matches the demand for their product.

Similarly, days’ sales in inventory are used to give an indication as to how many days it takes for an organisation to convert its inventory into sales.

Answer 30

Ch. 18 - Prob. 1DQ Ch. 18 - Prob. 2DQ Ch. 18 - Prob. 3DQ Ch. 18 - Prob. 4DQ Ch. 18 - Prob. 5DQ Ch. 18 - Prob. 6DQ Ch. 18 - Prob. 7DQ Ch. 18 - Prob. 8DQ Ch. 18 - Prob. 9DQ Ch. 18 - Prob. 10DQ

Concept explainers

Videos

Answer to Problem 3BPSB

Explanation of Solution

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Answer to Problem 3BPSB

Explanation of Solution

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Answer to Problem 3BPSB

Explanation of Solution

Want to see more full solutions like this?

Chapter 18 Solutions

Concept explainers

Videos

Answer to Problem 3BPSB

Explanation of Solution

2. To determine:- Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

Answer to Problem 3BPSB

Explanation of Solution

3. To determine:- Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.

Answer to Problem 3BPSB

Explanation of Solution

Want to see more full solutions like this?

Chapter 18 Solutions

2. To determine:-

Now, we are required to prepare Best Bikes income statement for the year ended December 31, 2017 showing therein selling expenses and general and administrative expenses.

3. To determine:-

Now, we are required to ascertain the inventory turnover and day’s sales in inventory for Best Bikes.