3 The following information pertains to the most recent quarter at Mega Products Limited: 4 5 Advertising expenses 125,000 6 Depreciation (80% factory; 20% administrative) 120,000 7 Finished goods inventory, beginning 84,000 8 Finished goods inventory, ending 78,000 9 General administrative expenses 140,000 10 Insurance (70% factory: 30% administrative) 60,000 11 Labour (75% direct; 25% indirect) 300,000 12 Marketing expenses 175,000 13 Raw materials inventory, beginning 25,000 14 Raw materials inventory, ending 40,000 15 Raw materials purchases 400,000 16 Sales 1,600,000 17 Utilities (70% factory: 30% administrative) 90,000 18 Work in process inventory, beginning 48,000 19 Work in process inventory, ending 62.000 20 21 of the raw materials used for production, $10,000 were indirect materials. 22 23 24 REQUIRED: 25 1. Prepare a schedule of cost of goods manufactured (10 marks). 27 MEGA PRODUCTS LIMITED 28 SCHEDULE OF COST OF GOODS MANUFACTURED 29 QUARTER ENDED 30 Direct Materials 31 Raw materials inventory, beginning 32 Raw materials purchases 33 Raw materials available for production 34 Raw materials inventory, ending 35 Raw materials used for production 36 Indirect materials 26 30 Direct Materials 31 Raw materials inventory, beginning 32 Raw materials purchases 33 Raw materials available for production 34 Raw materials inventory, ending 35 Raw materials used for production 36 Indirect materials 37 Direct Materials 38 39 Direct labour 40 41 Manufacturing overhead 42 43 44 45 46 47 48 49 50 51 Total manufacturing overhead 52 53 Total manufacturing costs 54 Work in process inventory, beginning 55 Total WIP 56 Work in process inventory, ending 57 Cost of goods manufactured 58 62 2. Prepare an income statement. The income tax rate is 20% (8 marks). 63 64 MEGA PRODUCTS LIMITED 65 INCOME STATEMENT 66 QUARTER ENDED .... 67 Sales 68 Finished goods inventory, beginning 69 Cost of goods manufactured 70 Cost of goods available for sale 71 Finished goods inventory, ending 72 Cost of goods sold 73 74 Gross margin 75 76 Operating expenses 77 78 79 80 81 82 83 84 85 86 Total operating expenses 87 Operating income 88 Income tax expense 89 Net income 90 33 34 3. Assume that the company produced the equivalent of 10,000 units of product during the year. 95 What was the average cost per unit for direct materials? What was the average cost per unit for 96 factory insurance? (2 marks) 97 98 99 100 101 102 103 104 105 106 4. If depreciation is a fixed cost, what is the cost of factory depreciation that you expect will be 107 incurred in the next quarter, when 11,000 units will be produced? (1 mark) 108 109 LO