Chapter 2, Problem 2.34BE

Construct an income statement using product and period costs (Learning Objectives 4 & 5)

Backyard Amenities is a manufacturer of backyard and deck furniture. Its products are in high demand, and it carries no inventory. To follow is a list of selected account balances from its trial balance for the most recent year ended December 31 (in no particular order).

Salaries and wages (for administrative and sales staff)	38,100
Stain (used in manufacturing furniture)	14,500
Indirect labor costs (wages of maintenance workers in factory)	23,700
Other manufacturing overhead (includes factory insurance and property taxes)	11,300
Rent and utilities (for administrative offices)	13,200
Utility costs (related to factory)	12,100
Labor costs (wages of carpenters who build furniture)	33,700
Accounts receivable	31,200
Marketing costs	15,200
Wood (used in manufacturing furniture)	59,100
Sales revenues	267,000
Accounts payable	8,200

Requirements

Using the income statement accounts in the table, calculate:

1. 1. Cost of goods sold. Hint: Cost of goods sold can be calculated by summing the total product costs since there is no inventory.
2. 2. Operating expenses. Hint: Operating expenses are the company’s period costs.
3. 3. Gross profit
4. 4. Operating income