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Concept Introduction:
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
Multi step income statement:
There are two ways to present and income stamen: Single-step and Multi-step. In the, multi-step income statement the net income calculated after showing multiple steps. In this statement operating and items are separate from non operating items.
Requirement-1:
- Direct Material used
- Factory
overhead - Total
Manufacturing costs - Total Cost of work in
process - Cost of goods manufactured
![Check Mark](/static/check-mark.png)
Answer to Problem 4BTN
- Direct Material used = $881,875
- Factory overhead = 383,125
- Total Manufacturing costs = $1,915,750
- Total Cost of work in process= $1,931,625
- Cost of goods manufactured= $1,917,625
Explanation of Solution
The above amounts are calculated as follows:
Raw Material Purchases (A) | $ 872,500 | |
Raw Materials, beginning (B) | $ 177,500 | |
Raw Materials, Ending (C) | $ 168,125 | |
Direct Material used (D)= (A+B-C) | $ 881,875 | |
Direct labor (E) | $ 650,750 | |
Factory overhead: | ||
$32,500 | ||
Factory Supervision | $ 122,500 | |
Factory Supplies used | $15,750 | |
Factory Utilities | $36,250 | |
Indirect labor | $60,000 | |
Misc. Production Costs | $ 8,500 | |
Rent Expense-Factory Building | $79,750 | |
Maintenance expense- Factory equipment | $27,875 | |
Total Factory Overhead (F) | $ 383,125 | |
Total Manufacturing costs (G) = (D+E+F) | $ 1,915,750 | |
Work in process, beginning (H) | $15,875 | |
Total Cost of Work in Process (I) =(G+H) | $ 1,931,625 | |
Work in process, ending (J) | $14,000 | |
Cost of Goods Manufactured (K) = (I-J) | $ 1,917,625 |
Concept Introduction:
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
Multi step income statement:
There are two ways to present and income stamen: Single-step and Multi-step. In the, multi-step income statement the net income calculated after showing multiple steps. In this statement operating and items are separate from non operating items.
Requirement-1:
- Direct Material used
- Factory overhead
- Total Manufacturing costs
- Total Cost of work in process
- Cost of goods manufactured
![Check Mark](/static/check-mark.png)
Answer to Problem 4BTN
- Direct Material used = $881,875
- Factory overhead = 383,125
- Total Manufacturing costs = $1,915,750
- Total Cost of work in process= $1,931,625
- Cost of goods manufactured= $1,917,625
Explanation of Solution
The above amounts are calculated as follows:
Raw Material Purchases (A) | $ 872,500 | |
Raw Materials, beginning (B) | $ 177,500 | |
Raw Materials, Ending (C) | $ 168,125 | |
Direct Material used (D)= (A+B-C) | $ 881,875 | |
Direct labor (E) | $ 650,750 | |
Factory overhead: | ||
Depreciation expense-Factory equipment | $32,500 | |
Factory Supervision | $ 122,500 | |
Factory Supplies used | $15,750 | |
Factory Utilities | $36,250 | |
Indirect labor | $60,000 | |
Misc. Production Costs | $ 8,500 | |
Rent Expense-Factory Building | $79,750 | |
Maintenance expense- Factory equipment | $27,875 | |
Total Factory Overhead (F) | $ 383,125 | |
Total Manufacturing costs (G) = (D+E+F) | $ 1,915,750 | |
Work in process, beginning (H) | $15,875 | |
Total Cost of Work in Process (I) =(G+H) | $ 1,931,625 | |
Work in process, ending (J) | $14,000 | |
Cost of Goods Manufactured (K) = (I-J) | $ 1,917,625 |
Concept Introduction:
Income Statement:
Income Statement is the part of the financial statement which is prepared to calculate the net income earned by the organization. In the income statement, all expenses are subtracted from the revenues to calculate the net income. It is prepared for a particular period.
Multi step income statement:
There are two ways to present and income stamen: Single-step and Multi-step. In the, multi-step income statement the net income calculated after showing multiple steps. In this statement operating and items are separate from non operating items.
Requirement-3:
- Net Sales
- Cost of Goods Sold
- Gross Profit
- Total Operating expenses
- Net income or loss before tax
![Check Mark](/static/check-mark.png)
Answer to Problem 4BTN
- Net Sales =$3,217,500
- Cost of Goods Sold =$1,953,000
- Gross Profit = $1,264,500
- Total Operating expenses =$471,875
- Net income or loss before tax =$792,625
Explanation of Solution
The above amounts are calculated as follows:
Sales | $ 3,275,000 | |
Less: Sales Discount | $57,500 | |
Net Sales (X) | $ 3,217,500 | |
Raw Material Purchases (A) | $ 872,500 | |
Raw Materials, beginning (B) | $ 177,500 | |
Raw Materials, Ending (C) | $ 168,125 | |
Direct Material used (D)= (A+B-C) | $ 881,875 | |
Direct labor (E) | $ 650,750 | |
Factory overhead: | ||
Depreciation expense-Factory equipment | $32,500 | |
Factory Supervision | $ 122,500 | |
Factory Supplies used | $15,750 | |
Factory Utilities | $36,250 | |
Indirect labor | $60,000 | |
Misc. Production Costs | $ 8,500 | |
Rent Expense-Factory Building | $79,750 | |
Maintenance expense- Factory equipment | $27,875 | |
Total Factory Overhead (F) | $ 383,125 | |
Total Manufacturing costs (G) = (D+E+F) | $ 1,915,750 | |
Work in process, beginning (H) | $15,875 | |
Total Cost of Work in Process (I) =(G+H) | $ 1,931,625 | |
Work in process, ending (J) | $14,000 | |
Cost of Goods Manufactured (K) = (I-J) | $ 1,917,625 | |
Finished Goods, beginning (L) | $ 164,375 | |
Finished Goods, ending (M) | $ 129,000 | |
Cost of Goods sold (N) = (K+L-M) | $ 1,953,000 | |
Gross Profit (O) = (X-N) | $ 1,264,500 | |
Operating Expenses: | ||
Advertising expense | $19,125 | |
Depreciation expense-office equipment | $ 8,750 | |
Depreciation expense-Selling equipment | $10,000 | |
Office Salaries expense | $ 100,875 | |
Rent Expense-Office space | $21,125 | |
Rent Expense-Selling space | $25,750 | |
Sales Salaries expense | $ 286,250 | |
Total Operating Expenses | $ 471,875 | |
Net income before taxes | $ 792,625 |
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Chapter 18 Solutions
Connect Access Card For Fundamental Accounting Principles
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