Managerial Accounting test problem: HELP ME?

Question

Sales: $820
Purchases of raw materials: $180
Direct labor: $130
Mfg OH: $200
Admin expenses: $180
Selling expenses: $140
Raw materials inventory;beginning: $60
Raw " " ending: $20
Work in Progress inventory, beginning: $50
WIP " " ending: $20
Finished goods inventory, beginning: $110
Finishd " " ending: $150

a. how do I prepare a scheduel of cost of good manufactured?
b what are the cost of good sold?
c. prepare an income statement

Answer 1

You MUST struggle through this yourself or you are going to be hacked up, eaten, and excreted as stool on the final examination.

Hint: Income statement = income less expenses = Sales less "cost of goods sold" less administrative and selling expenses (leaving net profit before taxes as the result).

Hint: Beginning raw materials + purchase of raw materials less ending raw material inventory = raw materials used in Cost of Goods Sold.

Hint: the DECREASE in work in progress inventory from beginning $50 to ending $20 represents $30 of "WIP cost of goods sold"

Hint: the increase in finished goods inventory from $110 and beginning to $150 at end means -$40 of cost of goods sold were incurred, or, if you will, $40 was tied up in the increase of finished inventory and thus is not part of Cost of goods sold, so subtract $40 from CGS to account for costs transferred to the asset of inventory rather than flowing through to the buyers.

Direct labor is a cost of goods sold.

What do your class notes say about manufacturing overhead? Normally this should be part of cost of goods sold unless it includes all "fixed costs."

Administrative expenses and selling expenses are NOT part of cost of goods sold but should appear below CGS on the income statement, resulting in net profit.

Sales minus cost of goods sold = gross margin which - selling and administrative costs and fixed overhead = net profit before taxes. this is the formula for an income statement.

Everything you need to answer this question is in the "recepie" I gave you above. You HAVE to do this yourself in order to pass the final. Guaranteed.

Answer 2

You would have to give me more than points to do that one for you...tell you what, if no one answers this one I might work on it tonight and get back to you...

Answer 3

If you have to ask strangers for the test, how do you plan to do your job? You aren't ready for the position if you don't know.