W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for $400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips' accounting records provide the following information:

Purchases of raw materials $320,000

Beginning materials inventory 46,800

Ending materials inventory 66,800

Direct labor 200,000

Indirect labor 40,000

Rent, factory building 42,000

Depreciation, factory equipment 60,000

Utilities, factory 11,900

Salary, sales supervisor 90,000

Commissions, salespersons 180,000

General administration 300,000

Beginning work-in-process inventory 13,040

Ending work-in-process inventory 14,940

Beginning finished goods inventory 80,000

Ending finished goods inventory 114,100

Required:1.explain how to do a statement of cost of goods manufactured.

2.Compute the average cost of producing one unit of product in the year.

3.explain how to do an income statement for external users.

Refer to the list below for the exact wording of a label or an amount description within your statements.

Labels

Add Less Manufacturing overhead Selling expenses

Amount Descriptions

Beginning work in process

Commissions

Cost of goods manufactured

Cost of goods sold

Depreciation, factory equipment

Direct materials

Direct labor Ending work in process General administration expense Gross margin Indirect labor Operating income Operating loss Rent, factory building Sales Sales supervisor's salary Total cost of product Utilities, factory

1. Explain how to do a statement of cost of goods manufactured. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your statement. If an amount is negative, first enter a minus (-) sign.

W. W. Phillips Company

Statement of Cost of Goods Manufactured

For Last Year

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2. Compute the average cost of producing one unit of product in the year.

The average cost of producing one unit of product in the year was_________.

3. Explain how to do an income statement for external users. Refer to the list of Labels and Amount Descriptions for the exact wording of text items within your statement.

W. W. Phillips Company

Income Statement

For Last Year

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