MANUFACTURING STATEMENT
The following account balances and other information are from SUNN Corporation’s accounting records for year end December 31, 2011. Use this information to prepare (1) a table listing factory overhead costs, (2) a manufacturing statement (show only the total factory overhead cost), and (3) an income statement.
|
Advertising expense |
$ 85,000 |
Goods in process inventory, Dec. 31, 2010 |
$ 8,000 |
|
Amortization expense — Factory Patents |
16,000 |
Goods in process inventory, Dec. 31, 2011 |
9,000 |
|
Bad debts expense |
28,000 |
Income taxes |
53,400 |
|
Depreciation expense — Office equipment |
37,000 |
Indirect labor |
26,000 |
|
Depreciation expense — Factory building |
133,000 |
Interest expense |
25,000 |
|
Depreciation expense — Factory equipment |
78,000 |
Miscellaneous expense |
55,000 |
|
Direct labor |
250,000 |
Property taxes on factory equipment |
14,000 |
|
Factory insurance expired |
62,000 |
Raw materials inventory, Dec. 31, 2010 |
60,000 |
|
Factory supervision |
74,000 |
Raw materials inventory, Dec. 31, 2011 |
78,000 |
|
Factory supplies used |
21,000 |
Raw materials purchases |
313,000 |
|
Factory utilities |
115,000 |
Repairs expense — Factory equipment |
31,000 |
|
Finished goods inventory, Dec. 31, 2010 |
15,000 |
Salaries expense |
150,000 |
|
Finished goods inventory, Dec. 31, 2011 |
12,500 |
Sales |
1,630,000 |
- Analyze the account balances and select those that are part of factory overhead costs.
- Arrange these costs in a table that lists factory overhead costs for the year.
- Analyze the remaining costs and select those related to production activity for the year; selected costs should include the materials and goods in process inventories and direct labor.
- Prepare a manufacturing statement for the year showing the calculation of the cost of materials used in production, the cost of direct labor, and the total factory overhead cost. When presenting overhead cost on this statement, report only total overhead cost from the table of overhead costs for the year. Show the costs of beginning and ending goods in process inventory to determine cost of goods manufactured.
- Organize the remaining revenue and expense items into the income statement for the year. Combine cost of goods manufactured from the manufacturing statement with the finished goods inventory amounts to compute cost of goods sold for the year.