Cost Management

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Hi Students,
I would like you to study this problem and the solution to help in the preparation of your case study question on cost classification. Keith

PRACTICE PROBLEM AND SOLUTION

Given the following, prepare manufacturing statement and partial income statement.

Raw materials inventory 1/1/058,000
Raw materials inventory 12/31/055,000
Work in process inventory 1/1/052,000
Work in process inventory 12/31/053,000
Finished goods inventory 1/1/0515,000
Finished goods inventory 12/31/0516,000
Factory insurance2,000
Depreciation, factory machinery2,000
Utilities, factory500
Utilities, office500
Repairs, factory500
Raw materials purchases15,000
Sales100,000
Direct labor20,000
Indirect labor5,000
Plant manager’s salary5,000
Property taxes, office building1,000

SOLUTION

Co. Name|
Manufacturing Statement|
Year Ending 12/31/xx|
| | | | |
| | | |
Direct Materials| | | |
| Raw materials inventory, 1/1| 8,000 | | |
| Raw materials purchases| 15,000 | | |
| Total raw materials available for use| 23,000 | | | | Less: Raw materials inventory 12/31| (5,000)| | | | Direct materials used| | 18,000 | |
Direct labor| | 20,000 | |
Factory overhead| | | |
| Insurance| 2,000 | | |
| Depreciation| 2,000 | | |
| Utilities| 500 | | |
| Repairs| 500 | | |
| Indirect labor| 5,000 | | |
| Manager salary| 5,000 | | |
| Total manufacturing overhead| | 15,000 | |
Total manufacturing costs| | | 53,000 |
Goods in process inventory, 1/1| | | 2,000 |
Less: Goods in process inventory 12/31| | | (3,000)| Cost of goods manufactured| | | 52,000 |

Manufacturing Company| |
Income Statement| |
For Year Ended December 31, xxxx| |
| | | |
Revenue| | |
| Sales | |...
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