Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December.

	On Company		Off Company
Materials inventory, December 1	$75,140		$95,430
Materials inventory, December 31	(a)		107,840
Materials purchased	190,860		(a)
Cost of direct materials used in production	201,380		(b)
Direct labor	283,280		214,720
Factory overhead	87,910		106,880
Total manufacturing costs incurred in December	(b)		617,430
Total manufacturing costs	716,840		847,420
Work in process inventory, December 1	144,270		229,990
Work in process inventory, December 31	121,730		(c)
Cost of goods manufactured	(c)		611,710
Finished goods inventory, December 1	126,990		106,880
Finished goods inventory, December 31	133,000		(d)
Sales	1,107,560		954,300
Cost of goods sold	(d)		617,430
Gross profit	(e)		(e)
Operating expenses	144,270		(f)
Net income	(f)		211,850

Required:

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	On Company	Off Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

Feedback

1. a. The cost of direct materials used in production includes the beginning materials inventory plus purchases, less the ending materials inventory. b. Total manufacturing costs incurred during December include direct materials, direct labor, and factory overhead. c. The cost of goods manufactured is beginning work in process plus total manufacturing costs less the ending work in process. d. The cost of goods sold is the beginning finished goods plus the cost of goods manufactured, less the ending finished goods. e. Sales minus cost of goods sold equals gross profit. f. Gross profit minus operating expenses equals net income.

Use similar relationships from On to find the missing amounts for the Off items (a) through (f).

2. Prepare On Company's statement of cost of goods manufactured for December.

On Company
Statement of Cost of Goods Manufactured
For the Month Ended December 31
Work in process inventory, December 1			$
Direct materials:
Materials inventory, December 1	$
Purchases
Cost of materials available for use	$
Less materials inventory, December 31
Cost of direct materials used in production		$
Direct labor
Factory overhead
Total manufacturing costs incurred during December
Total manufacturing costs			$
Less work in process inventory, December 31
Cost of goods manufactured			$

Feedback

2. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process.

3. Prepare On Company's income statement for December.

On Company
Income Statement
For the Month Ended December 31
Sales		$
Cost of goods sold:
Finished goods inventory, December 1	$
Cost of goods manufactured
Cost of finished goods available for sale	$
Less finished goods inventory, December 31
Cost of goods sold
Gross profit		$
Operating expenses
Net income