Question:Preparing a schedule of cost of goods manufactured and an income statement for a manufacturing company

Gourmet Bones manufactures its own brand of pet chew bones. At the end of December 2018, the accounting records showed the following:

Balances: Beginning Ending

Direct Materials \( 13,500 \) 7,500

Work-in-Process Inventory 0 3,500

Finished Goods Inventory 0 5,200

Other information:

Direct materials purchases$ 36,000

Plant janitorial services 700

Sales salaries 6,000

Delivery costs1,300

Net sales revenue 107,000

Utilities for plant 1,300

Rent on plant 17,000

Customer service hotline costs 1,200

Direct labor23,000

Requirements

1. Prepare a schedule of cost of goods manufactured for Gourmet Bones for the year ended December 31, 2018.

2. Prepare an income statement for Gourmet Bones for the year ended December 31, 2018.

3. How does the format of the income statement for Gourmet Bones differ from the income statement of a merchandiser?

4. Gourmet Bones manufactured 17,900 units of its product in 2018. Compute the company’s unit product cost for the year, rounded to the nearest cent.

Gourmet Bones

Schedule of cost goods manufactured

The year ended December 31, 2018

Amount ($)

Amount ($)

Amount ($)

Beginning WIP Inventory

Direct Materials Used

Beginning Direct material

$13,500

Purchases of direct material

$36,000

Direct Materials available for use

$49,500

Ending direct materials

-$7,500

Direct Materials used

$42,000

Direct Labor

$23,000

Manufacturing overhead

Plant Janitorial services

$700

Utilities for plant

$1,300

Rent on Plant

$17,000

Total Manufacturing Overhead

$19,000

Total manufacturing cost incurred during the year

$84,000

Total manufacturing cost to account for

$84,000

Ending WIP Inventory

-$3,500

Cost of goods manufactured

$80,500

Gourmet Bones

Income Statement

The year ended December 31, 2018

Amount ($)

Amount ($)

Revenues:

Net Sales Revenue

$107,000

Cost of goods sold

Beginning finished goods inventory

0

Cost of goods manufactured

$80,500

Cost of goods available for sale

$80,500

Ending finished goods inventory

-$5,200

Cost of goods sold

$75,300

Gross Profit

$31,700

Selling and administrative Expenses

Sales Salaries Expense

$6,000

Delivery Expense

$1,300

Customer service hotline Expense

$1,200

Total Selling and administrative Expenses

$8,500

Operating Income (loss)

$23,200