Problem 3.

The following costs and inventory data were taken from the accounts of Rossini Company for 2008:

January 1, 2008 December 31, 2008

Inventories:

Raw materials $ 8,000 $ 7,000

Work in process 15,000 13,000

Finished goods 16,000 10,000

Costs incurred:

Raw materials purchases $93,000

Direct labor 42,000

Factory rent 8,000

Factory utilities 7,000

Indirect materials 4,000

Indirect labor 6,000

Selling expenses 5,000

Administrative expenses 12,000

Instructions

a. Prepare a schedule showing the amount of direct materials used in production during the year.

b. Compute the amount of manufacturing overhead incurred during the year.

c. Prepare a schedule of Cost of Goods Manufactured for Reser Company for the year ended December 31, 2008 in good form.

d. Prepare the Cost of Goods Sold section of the Income Statement for Rossini Company for the year ended December 31, 2008 in good form.