Case 1
Direct Materials Used $8,300
Direct Labor 3,000
Manufacturing Overhead 6,000
Total Manufacturing Costs (a)
Beginning Work in Process 1,000
Ending Work in Process Inventory (b)
Sales 22,500
Sales Discounts 1,500
Cost of Goods Manufactured 15,800
Beginning Finished Goods Inventory (c)
Goods Available for sale 17,300
Cost of Goods Sold (d)
Ending Finished Goods Inventory 1,200
Gross Profit (e)
Operating Expenses 2,700
Net Income (f)
Case 2
Direct Materials Used (g)
Direct Labor 4,000
Manufacturing Overhead 5,000
Total Manufacturing Costs 20,000
Beginning Work in Process (h)
Ending Work in Process Inventory 2,000
Sales (i)
Sales Discounts 1,200
Cost of Goods Manufactured 21,000
Beginning Finished Goods Inventory 4,000
Goods Available for sale (j)
Cost of Goods Sold (k)
Ending Finished Goods Inventory 2,500
Gross Profit 6,000
Operating Expenses (l)
Net Income 3,200
Instructions
(a) Indicate the missing amount for each letter.
(b) Prepare a condensed cost of goods manufactured schedule for Case 1.
(c) Prepare an income statement and the current assets section of the balance sheet for
Case 1. Assume that in Case 1 the other items in the current assets section are as follows:
Cash $3,000, Receivables (net) $10,000, Raw Materials $700, and Prepaid Expenses $200.
(a) To find the missing amounts for each letter, we can use the information given in the statements.
(a) Total Manufacturing Costs = Direct Materials Used + Direct Labor + Manufacturing Overhead
Total Manufacturing Costs = $8,300 + $3,000 + $6,000 = $17,300
(b) Cost of Goods Manufactured = Beginning Work in Process + Total Manufacturing Costs - Ending Work in Process Inventory
$15,800 = $1,000 + $17,300 - (b)
(b) = $1,000 + $17,300 - $15,800
(b) = $1,500
(d) Cost of Goods Sold = Goods Available for Sale - Ending Finished Goods Inventory
Cost of Goods Sold = $17,300 - $1,200
(d) = $16,100
(e) Gross Profit = Sales - Cost of Goods Sold
Gross Profit = $22,500 - $16,100
(e) = $6,400
(f) Net Income = Gross Profit - Operating Expenses
Net Income = $6,400 - $2,700
(f) = $3,700
(g) Direct Materials Used = Total Manufacturing Costs - Direct Labor - Manufacturing Overhead
(g) = $20,000 - $4,000 - $5,000
(g) = $11,000
(h) Beginning Work in Process = Cost of Goods Manufactured - Total Manufacturing Costs + Ending Work in Process Inventory
(h) = $21,000 - $20,000 + $2,000
(h) = $3,000
(i) Sales = Goods Available for Sale + Sales Discounts + Cost of Goods Sold
$22,500 = (j) + $1,200 + (k)
Since the values for (j) and (k) are not given, we cannot determine the value of (i).
(j) Goods Available for Sale = Beginning Finished Goods Inventory + Cost of Goods Manufactured
(j) = $4,000 + $21,000
(j) = $25,000
(k) Cost of Goods Sold = Goods Available for Sale - Ending Finished Goods Inventory
(k) = $25,000 - $2,500
(k) = $22,500
(l) Operating Expenses = Gross Profit - Net Income
(l) = $6,000 - $3,200
(l) = $2,800