Biology Forums - Study Force

Farley Muffler Inc. received the following monthly report from its newly hired accountant, who quit after only a week on the job.

   Farley Muffler Inc.
   Cost of Goods Sold Schedule

Finished Goods Inventory (beginning)         $15,000
Work-in-Process Inventory (beginning)            3,000
Total         $18,000

Current Manufacturing Costs:
  Salaries and wages:
   Direct manufacturing labour   $5,000
   Indirect manufacturing labour   2,000
   Sales salaries   4,000
   Administrative    3,000   $14,000

Other:
   Manufacturing supplies   $1,500
   Manufacturing amortization   3,500
   Insurance on showroom   1,000
   Miscellaneous factory overhead     6,500   12,500     26,500
Total Work in Process         $44,500
Ending Work-in-Process and Finished Goods Inventory                  0
Cost of Goods Sold         $44,500

   Farley Muffler, Inc.
   Income Statement
Sales         $100,000
Less direct materials           20,000
Gross profit         $80,000

Less other expenses:
   Cost of goods sold      $44,500
   Office supplies      250
   Manufacturing utilities      1,000
   Office utilities         250     46,000
Net Income         $34,000

Required:
a.   Prepare a cost of goods manufactured schedule.
b.   Prepare an income statement in good form.

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