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	$65,860	$88,250
Materials inventory, December 31	(a)	99,720
Materials purchased	167,280	(a)
Cost of direct materials used in production	176,500	(b)
Direct labor	248,290	198,560
Factory overhead	77,060	98,840
Total manufacturing costs incurred in December	(b)	570,980
Total manufacturing costs	628,300	628,300
Work in process inventory, December 1	126,450	212,680
Work in process inventory, December 31	106,690	(c)
Cost of goods manufactured	(c)	565,680
Finished goods inventory, December 1	111,300	98,840
Finished goods inventory, December 31	116,570	(d)
Sales	970,780	882,500
Cost of goods sold	(d)	570,980
Gross profit	(e)	(e)
Operating expenses	126,450	(f)
Net income	(f)	195,920

Required:

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

Letter	On Company	Off Company
a.	fill in the blank 1 of 12$	fill in the blank 2 of 12$
b.	fill in the blank 3 of 12$	fill in the blank 4 of 12$
c.	fill in the blank 5 of 12$	fill in the blank 6 of 12$
d.	fill in the blank 7 of 12$	fill in the blank 8 of 12$
e.	fill in the blank 19 of 12$	fill in the blank 10 of 12$
f.	fill in the blank 11 of 12$	fill in the blank 12 of 12$

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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 Company to find the missing amounts for the Off Company items (a) through (f).

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

Costs Type	Amount	Amount	Amount
Indirect laborMachinery depreciationSuppliesWork in process inventory, December 1Work in process inventory, December 31Work in process inventory, December 1			$Work in process inventory, December 1
Direct materials:
Direct laborFactory overheadMaterials inventory, December 1Work in process inventory, December 1Work in process inventory, December 31Materials inventory, December 1	$Materials inventory, December 1
Factory overheadOperating expensesPurchasesSalesWork in process inventory, December 1Purchases	Purchases
Cost of direct materials used in productionCost of goods manufacturedCost of goods soldCost of materials available for useFactory overheadCost of materials available for use	$Cost of materials available for use
Cost of goods soldIndirect laborMaterials inventory, December 31Work in process inventory, December 1Work in process inventory, December 31Materials inventory, December 31	Materials inventory, December 31
Cost of direct materials used in productionCost of goods manufacturedCost of goods soldCost of materials available for useFactory overheadCost of direct materials used in production		$Cost of direct materials used in production
Cost of goods soldDirect laborIndirect laborWork in process inventory, December 1Work in process inventory, December 31Direct labor		Direct labor
Cost of materials available for useDirect materialsFactory overheadPurchasesWork in process inventory, December 31Factory overhead		Factory overhead
Total manufacturing costs incurred during December			Total manufacturing costs incurred during December
Total manufacturing costs			$Total manufacturing costs
Cost of materials available for useDirect materialsMaterials inventory, December 31Work in process inventory, December 1Work in process inventory, December 31Work in process inventory, December 31			Work in process inventory, December 31
Cost of direct materials used in productionCost of goods manufacturedCost of goods soldCost of materials available for useFactory overheadCost of goods manufactured			$Cost of goods manufactured

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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.

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

Line Item Description	Amount	Amount
Cost of goods manufacturedCost of finished goods available for saleGross profitIndirect laborSalesSales		$Sales
Cost of goods sold:
Finished goods inventory, December 1Finished goods inventory, December 31Gross operating expensesIndirect laborSalesFinished goods inventory, December 1	$Finished goods inventory, December 1
Cost of direct materials used in productionCost of goods manufacturedCost of goods soldCost of materials available for useMaterials inventory, December 1Cost of goods manufactured	Cost of goods manufactured
Cost of direct materials used in productionCost of finished goods available for saleCost of goods manufacturedCost of materials available for useMaterials inventory, December 1Cost of finished goods available for sale	$Cost of finished goods available for sale
Finished goods inventory, December 1Finished goods inventory, December 31Indirect laborOperating expensesSalesFinished goods inventory, December 31	Finished goods inventory, December 31
Cost of direct materials used in productionCost of goods manufacturedCost of goods soldCost of materials available for useMaterials inventory, December 1Cost of goods sold		Cost of goods sold
Cost of goods manufacturedCost of finished goods available for saleGross profitIndirect laborSalesGross profit		$Gross profit
Direct laborFactory overheadFinished goods inventory, December 1Indirect laborOperating expensesOperating expenses		Operating expenses
Net incomeNet lossNet income		$Net income