Chapter 2, Problem 29E

Alexandria Aluminum Company, a manufacturer of recyclable soda cans, had the following inventory balances at the beginning and end of 20x1.

During 20x1, the company purchased $250,000 of raw material and spent $400,000 on direct labor. Manufacturing overhead costs were as follows:

Sales revenue was $1,105,000 for the year. Selling and administrative expenses for the year amounted to $110,000. The firm’s tax rate is 40 percent.

Required:

1. 1. Prepare a schedule of cost of goods manufactured.
2. 2. Prepare a schedule of cost of goods sold.
3. 3. Prepare an income statement.
4. 4. Build a spreadsheet: Construct an Excel spreadsheet to solve all of the preceding requirements. Show how both cost schedules and the income statement will change if the following data change: direct labor is $390,000 and utilities cost $35,000.