The accounting records of Nu-tonics Inc., include the following information for the year ended December 31, 2013:
Materials Inventory as at 1 January 2013 $ 20,000
Materials Inventory as at 31 December 2013 $ 24,000
Work in process Inventory as at 1 January 2013 $ 12,000
Work in process Inventory as at 31 December 2013 $ 8,000
Finished goods Inventory as at 1 January 2013 $ 80,000
Finished goods Inventory as at 31 December 2013 $ 90,000
Direct Materials used $210,000
Direct Labour $ 120,000
Administrative Expenses $ 310,000
Sales $ 700,000
Required:
1. Prepare a Schedule of the Cost of Finished Goods Manufactured for the year ended 31 December 2013.
2. Prepare the Income statement for the period ending 31 December 2013.
To prepare the Schedule of the Cost of Finished Goods Manufactured, we need to calculate the various components of the cost of goods manufactured.
1. Direct Materials used:
Direct Materials used = Beginning Materials Inventory + Purchases - Ending Materials Inventory
= $20,000 + Purchases - $24,000
= $Purchases - $4,000 (Equation 1)
2. Direct Labor:
Direct Labor = $120,000
3. Manufacturing Overhead:
Manufacturing Overhead = Administrative Expenses
= $310,000
4. Total Manufacturing Costs:
Total Manufacturing Costs = Direct Materials used + Direct Labor + Manufacturing Overhead
= ($Purchases - $4,000) + $120,000 + $310,000
= ($Purchases + $426,000) (Equation 2)
5. Cost of Goods Manufactured:
Cost of Goods Manufactured = Beginning Work in Process Inventory + Total Manufacturing Costs - Ending Work in Process Inventory
= $12,000 + ($Purchases + $426,000) - $8,000
= $Purchases + $430,000 (Equation 3)
Now, to calculate the values for the Schedule of the Cost of Finished Goods Manufactured, we need additional information about purchases and beginning and ending inventories. Please provide the following:
- Purchases of materials during the year.
- Beginning and ending inventories for work in process.
To prepare the Schedule of the Cost of Finished Goods Manufactured and the Income Statement for Nu-tonics Inc. for the year ended December 31, 2013, you will need to follow certain steps and calculations.
1. Schedule of the Cost of Finished Goods Manufactured:
To calculate the cost of finished goods manufactured, we need to account for the direct materials, direct labor, and manufacturing overhead costs.
Step 1: Calculate the Cost of Direct Materials Used:
Direct materials used = Materials inventory at the beginning + Purchases - Materials inventory at the end
Direct materials used = $20,000 + Purchases - $24,000
Note that the purchases are not given in the information you provided. You will need to refer to additional information to find the value of purchases for the year.
Step 2: Calculate the Total Manufacturing Costs:
Total Manufacturing Costs = Direct materials used + Direct labor + Manufacturing overhead
Total Manufacturing Costs = Direct materials used + $120,000 + Manufacturing overhead
Note that the value for manufacturing overhead is not given in the information you provided. You will need to refer to additional information to find the value of manufacturing overhead for the year.
Step 3: Calculate the Cost of Finished Goods Manufactured:
Cost of Finished Goods Manufactured = Total Manufacturing Costs + Work in Process inventory at the beginning - Work in Process inventory at the end
Cost of Finished Goods Manufactured = Total Manufacturing Costs + $12,000 - $8,000
2. Income Statement:
To prepare the Income Statement, we need to account for the costs of goods sold, direct materials used, direct labor, manufacturing overhead, and other operating expenses.
Step 1: Calculate the Cost of Goods Sold:
Cost of Goods Sold = Opening Finished Goods inventory + Cost of Finished Goods Manufactured - Closing Finished Goods inventory
Cost of Goods Sold = $80,000 + Cost of Finished Goods Manufactured - $90,000
Step 2: Calculate the Gross Profit:
Gross Profit = Sales - Cost of Goods Sold
Step 3: Calculate the Operating Profit:
Operating Profit = Gross Profit - Administrative Expenses
Step 4: Prepare the Income Statement in the following format:
Sales
- Cost of Goods Sold
_______________________
Gross Profit
- Administrative Expenses
_______________________
Operating Profit
Note that certain values needed for these calculations, such as purchases and manufacturing overhead, are not provided in the information you provided. You will need to refer to additional information or make certain assumptions to complete the calculations accurately.