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Income Statement, Cost of Goods Manufactured Spencer Company produced 200,000 cases of sports drinks during the past calendar year. Each case of 1-liter bottles sells

  1. Income Statement, Cost of Goods Manufactured

    Spencer Company produced 200,000 cases of sports drinks during the past calendar year. Each case of 1-liter bottles sells for $36. Spencer had 2,500 cases of sports drinks in finished goods inventory at the beginning of the year. At the end of the year, there were 11,500 cases of sports drinks in finished goods inventory. Spencers accounting records provide the following information:

    Purchases of direct materials $2,340,000
    Direct materials inventory, January 1 290,000
    Direct materials inventory, December 31 110,000
    Direct labor 1,200,000
    Indirect labor 334,000
    Depreciation, factory building 525,000
    Depreciation, factory equipment 416,000
    Property taxes on factory 65,000
    Utilities, factory 150,000
    Insurance on factory 200,000
    Salary, sales supervisor 85,000
    Commissions, salespersons 218,000
    Advertising 500,000
    General administration 390,000
    Work-in-process inventory, January 1 440,000
    Work-in-process inventory, December 31 750,000
    Finished goods inventory, January 1 107,500
    Finished goods inventory, December 31 488,750

    Required:

    1. Prepare a cost of goods manufactured statement.

    Spencer Company
    Statement of Cost of Goods Manufactured
    For the Year Ended December 31
    Direct materials:
    • Beginning inventory
    • Beginning work in process
    • Cost of goods manufactured
    • Depreciation, factory building
    • Depreciation, factory equipment
    • Purchases
    • Utilities, factory
    $
    • Add: Beginning work in process
    • Add: Cost of goods manufactured
    • Add: Depreciation, factory building
    • Add: Ending inventory
    • Add: Ending work in process
    • Add: Indirect labor
    • Add: Purchases
    • Beginning work in process
    • Ending inventory
    • Ending work in process
    • Materials available
    • Purchases
    • Total manufacturing costs added
    • Utilities, factory
    $
    • Less: Beginning inventory
    • Less: Beginning work in process
    • Less: Cost of goods manufactured
    • Less: Depreciation, factory building
    • Less: Direct labor
    • Less: Ending inventory
    • Less: Ending work in process
    • Cost of goods manufactured
    • Depreciation, factory building
    • Depreciation, factory equipment
    • Direct labor
    • Direct materials used in production
    • Indirect labor
    • Insurance on factory
    $
    • Beginning work in process
    • Cost of goods manufactured
    • Direct labor
    • Ending inventory
    • Ending work in process
    • Insurance on factory
    • Purchases
    Manufacturing overhead:
    • Beginning inventory
    • Beginning work in process
    • Cost of goods manufactured
    • Direct labor
    • Ending inventory
    • Indirect labor
    • Purchases
    $
    • Beginning inventory
    • Beginning work in process
    • Depreciation, factory building
    • Direct labor
    • Ending inventory
    • Ending work in process
    • Purchases
    • Beginning inventory
    • Beginning work in process
    • Cost of goods manufactured
    • Depreciation, factory equipment
    • Direct labor
    • Ending inventory
    • Ending work in process
    • Beginning inventory
    • Beginning work in process
    • Direct labor
    • Ending inventory
    • Ending work in process
    • Property taxes on factory
    • Purchases
    • Beginning inventory
    • Beginning work in process
    • Direct labor
    • Ending inventory
    • Ending work in process
    • Purchases
    • Utilities, factory
    • Beginning inventory
    • Beginning work in process
    • Direct labor
    • Ending inventory
    • Ending work in process
    • Insurance on factory
    • Purchases
    Total manufacturing costs added $
    • Add: Beginning inventory
    • Add: Beginning work in process
    • Add: Ending inventory
    • Add: Ending work in process
    • Add: Property taxes on factory
    • Add: Purchases
    • Add: Utilities, factory
    • Less: Beginning inventory
    • Less: Beginning work in process
    • Less: Direct labor
    • Less: Ending inventory
    • Less: Ending work in process
    • Less: Indirect labor
    • Less: Purchases
    Cost of goods manufactured $

    Feedback

    2. Compute the cost of producing one case of sports drink last year. If required, round your answer to the nearest cent.

    $ per case

    Feedback

    3. Prepare an income statement on an absorption-costing basis. Show the percentage of sales that each line item represents. Round the percent to four decimal places before converting to a percentage. For example, .88349 would be rounded to .8835 and entered as 88.35.

    Spencer Company
    Income Statement: Absorption Costing
    For the Year Ended December 31
    Percent
    • Administrative expenses
    • Commissions, salespersons
    • Cost of goods sold
    • Ending finished goods inventory
    • Goods available for sale
    • Salary, sales supervisor
    • Sales
    %
    Cost of goods sold:
    • Administrative expenses
    • Advertising
    • Beginning finished goods inventory
    • Cost of goods manufactured
    • Operating income
    • Salary, sales supervisor
    • Sales
    • Add: Beg. finished goods inventory
    • Add: Commissions, salespersons
    • Add: Ending finished goods inventory
    • Add: Goods available for sale
    • Add: Operating income
    • Add: Salary, sales supervisor
    • Add: Sales
    • Advertising
    • Beginning finished goods inventory
    • Commissions, salespersons
    • Ending finished goods inventory
    • Goods available for sale
    • Operating income
    • Salary, sales supervisor
    • Less: Administrative expenses
    • Less: Advertising
    • Less: Beginning finished goods inventory
    • Less: Commissions, salespersons
    • Less: End. finished goods inventory
    • Less: Goods available for sale
    • Less: Gross margin
    %
    • Gross margin
    • Gross loss
    Less: Operating expenses:
    • Beginning finished goods inventory
    • End. finished goods inventory
    • Goods available for sale
    • Gross margin
    • Operating income
    • Salary, sales supervisor
    • Sales
    • Beginning finished goods inventory
    • Commissions, salespersons
    • Cost of goods manufactured
    • End. finished goods inventory
    • Goods available for sale
    • Gross margin
    • Sales
    • Advertising
    • Beginning finished goods inventory
    • Cost of goods manufactured
    • End. finished goods inventory
    • Goods available for sale
    • Gross margin
    • Sales
    %
    • Administrative expenses
    • Beginning finished goods inventory
    • End. finished goods inventory
    • Goods available for sale
    • Gross margin
    • Net margin
    • Sales
    %
    • Beginning finished goods inventory
    • Cost of goods manufactured
    • Cost of goods sold
    • Ending finished goods inventory
    • Goods available for sale
    • Operating income
    • Sales
    %

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