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Carolina Corporation manufactures goods. For the year ended December 31, 2017: 1. The cost of goods manufactured was $812,000, calculated by adding the costs of direct materials used ($313,000), direct manufacturing labor ($217,000), and indirect manufacturing costs ($254,000) plus the beginning work-in-process inventory ($173,000) and subtracting the ending work-in-process inventory ($145,000). 2. Revenues for the year were $1,300,000. The income statement shows cost of goods sold of $846,000, gross margin of $454,000, operating costs of $196,000, and operating income of $258,

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133 views

Document 9

Carolina Corporation manufactures goods. For the year ended December 31, 2017: 1. The cost of goods manufactured was $812,000, calculated by adding the costs of direct materials used ($313,000), direct manufacturing labor ($217,000), and indirect manufacturing costs ($254,000) plus the beginning work-in-process inventory ($173,000) and subtracting the ending work-in-process inventory ($145,000). 2. Revenues for the year were $1,300,000. The income statement shows cost of goods sold of $846,000, gross margin of $454,000, operating costs of $196,000, and operating income of $258,

Uploaded by

mohammedbudul18
Copyright
© © All Rights Reserved
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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2-38 Cost of goods manufactured, income statement, manufacturing company.

Consider
the following account balances (in thousands) for the Carolina Corporation:

Beginning of End of
Carolina Corporation Year Year
Direct materials inventory 124,000 73,000
Work-in-process inventory 173,000 145,000
Finished-goods inventory 240,000 206,000
Purchases of direct materials 262,000
Direct manufacturing labor 217,000
Indirect manufacturing labor 97,000
Plant insurance 9,000
Depreciation—plant, building, and 45,000
equipment
Plant utilities 26,000
Repairs and maintenance—plant 77,000
Marketing, distribution, and customer- 125,000
service costs
General and administrative costs 71,000

Required:
1. Prepare a schedule for the cost of goods manufactured.
2. Revenues (in thousands) for the year were $1,300,000. Prepare the income statement
Carolina Corporation
Schedule of Cost of Goods Manufactured
Year Ended December 31, 2017
(in thousands)

Direct materials costs


Beginning inventory, January 1 $124,000
Purchases of direct materials 262,000
Cost of direct materials available for use 386,000
Ending inventory, December 31 73,000
Direct materials used $313,000
Direct manufacturing labor costs 217,000
Indirect manufacturing costs
Indirect manufacturing labor 97,000
Plant insurance 9,000
Depreciation—plant building & equipment 45,000
Plant utilities 26,000
Repairs and maintenance—plant 77,000
Total indirect manufacturing costs 254,000
Manufacturing costs incurred 784,000
Add beginning work-in-process inventory, January 1 173,000
Total manufacturing costs to account for 957,000
Deduct ending work-in-process inventory, December 31 145,000
Cost of goods manufactured (to Income Statement) $812,000

Carolina Corporation
Income Statement
Year Ended December 31
(in thousands)

Revenues $1,300,000
Cost of goods sold:
Beginning finished goods, January 1 $ 240,000
Cost of goods manufactured 812,000
Cost of goods available for sale 1,052,000
Ending finished goods, December 31 206,000
Cost of goods sold 846,000
Gross margin 454,000
Operating costs:
Marketing, distribution, and customer-service costs 125,000
General and administrative costs 71,000
Total operating costs 196,000
Operating income $ 258,000

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