COST OF GOODS MANUFACTURED, INCOME STATEMENT W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for $400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips’ accounting records provide the following information:

Purchases of raw materials $320,000 Beginning materials inventory 46,800 Ending materials inventory 66,800 Direct labor 200,000 Indirect labor 40,000 Rent, factory building 42,000 Depreciation, factory equipment 60,000 Utilities, factory 11,900 Salary, sales supervisor 90,000 Commissions, salespersons 180,000 General administration 300,000 Beginning work-in-process inventory 13,040 Ending work-in-process inventory 14,940 Beginning finished goods inventory 80,000 Ending finished goods inventory 114,100 Required:

. Prepare a statement of cost of goods manufactured.

. Compute the average cost of producing one unit of product in the year.

. Prepare an income statement for external users.

Problem