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 2014:

Grant Company McClellan Company Materials inventory, December 1 $73,640 $95,000 Materials inventory, December 31 (a) 107,350 Materials purchased 187,050 213,750 Cost of direct materials used in production 197,360 (a) Direct labor 277,620 (b) Factory overhead 86,160 106,400 Total manufacturing costs incurred during December (b) 614,650 Total manufacturing costs 702,530 843,600 Work in process inventory, December 1 141,390 228,950 Work in process inventory, December 31 119,300 (c) Cost of goods manufactured (c) 608,950 Finished goods inventory, December 1 124,450 106,400 Finished goods inventory, December 31 130,340 (d) Sales 1,085,450 950,000 Cost of goods sold (d) 614,650 Gross profit (e) (e) Operating expenses 141,390 (f) Net income (f) 210,900

Required:

Hint(s)

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

Letter Grant Company McClellan Company a. $ $ b. $ $ c. $ $ d. $ $ e. $ $ f. $ $

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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 Grant to find the missing amounts for the McClellan items (a) through (f).

Learning Objective 2, Learning Objective 3.

Hint(s)

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2. Prepare McClellan Company's statement of cost of goods manufactured for December. Enter all amounts as positive numbers.

McClellan Company

Statement of Cost of Goods Manufactured

For the Month Ended December 31, 2014

$

Direct materials:

$

$

$

Total manufacturing costs incurred during December

Total manufacturing costs

$

$

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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.

Learning Objective 2, Learning Objective 3.

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

McClellan Company

Income Statement

For the Month Ended December 31, 2014

$

Cost of goods sold:

$

$

$

$