Answer to Question #288800 in Accounting for Joseph

Question

Assume the following account balances (in thousands) for Guma Company, a

manufacturing firm

Beg.of. 2020 End of 2020

Direct Material Inventory Br. 22,000 Br. 26,000

Work in process inventory 21,000 20,000

Finished Goods Inventory 18,000 23,000

Purchase of direct materials 75,000

Direct Manufacturing Labor 25,000

Indirect Manufacturing Labor 15,000

Insurance on Factory Property 9,000

Depreciation – Factory Building and Equipment 11,000

Factory Utilities 4,000

Marketing, Distribution, and Customer Service Costs 93,000

General and Administrative Costs 29,000

Required:

1) Prepare a schedule of cost of goods manufactured for 2020

2) If revenues for 2020 were 300 million, prepare income statement

Answer 1

Direct Materials

Opening Stock 22,000

Purchases of R/M 75,000

Closing R/M (26,000)

71,000

Labour

Direct labour 25,000

Indirect Labour 15000

40,000

Opening WIP 21,000

Closing WIP (20,000)

1,000

COGM= 71,000+40,000+ 1000= 112,000

Income Statement

Revenue 300,000

Cost of sales

Opening Inventory 18,000

COGM 112,000

Closing Inventory (23,000) (107,000)

Gross Profit 193,000

Expenses

Insurance on Property 9,000

Depreciation 11,000

Factory Utilities 4,000

Mkt & Distribution 93,000

Hen & Admin 29,000 (146,000)

Net Profit 47,000