Tuesday, 31 July 2012

Valenko Company provided the following account balances for the year ended December 31

Valenko Company provided the following account balances for the year ended December 31 (all raw materials are used in production as direct materials):

  
  Selling expenses $ 217,000  
  Purchases of raw materials $ 264,000  
  Direct labor ?
  Administrative expenses $ 159,000  
  Manufacturing overhead applied to work in process $ 334,000  
  Total actual manufacturing overhead costs $ 352,000  


Inventory balances at the beginning and end of the year were as follows:
 
   Beginning of Year End of Year
  Raw materials $ 55,000 $ 37,000
  Work in process ? $ 27,000
  Finished goods $ 37,000 ?


The total manufacturing costs for the year were $685,000; the cost of goods available for sale totaled $735,000; the unadjusted cost of goods sold totaled $664,000; and the net operating income was $38,000. The company’s overapplied or underapplied overhead is closed entirely to cost of goods sold.

Required:
a. Prepare a schedule of cost of goods manufactured. (Input all amounts as positive values. Omit the "$" sign in your response.)
  
Valenko Company
Schedule of Cost of Goods Manufactured
  Direct materials:
       Raw materials inventory, beginning correct $ 55,000 correct  
       Add correct : Purchases of raw materials correct 264,000 correct  
  
       Total raw materials available 319,000 correct  
       Deduct correct : Raw materials inventory, ending correct 37,000 correct  
  
       Raw materials used in production 282,000 correct  
  Direct labor correct 69,000 correct  
  Manufacturing overhead applied to work in process inventory correct 334,000 correct  
  
  Total manufacturing cost 685,000 correct  
  Add correct : Beginning work in process inventory correct 40,000 correct  
  
725,000 correct  
  Deduct correct : Ending work in process inventory correct 27,000 correct  
  
  Cost of goods manufactured $ 698,000 correct  
  


  
b.
Prepare a schedule of cost of goods sold. (Input all amounts as positive values. Omit the "$" sign in your response.)
  
Valenko Company
Schedule of Cost of Goods Sold
  Finished goods inventory, beginning correct $ 37,000 correct  
  Add correct : Cost of goods manufactured correct 698,000 correct  
  
  Cost of goods available for sale correct 735,000 correct  
  Deduct correct : Finished goods inventory, ending correct 71,000 correct  
  
  Unadjusted cost of goods sold correct 664,000 correct  
  Add correct : Underapplied overhead correct 18,000 correct  
  
  Adjusted cost of goods sold $ 682,000 correct  
  



c.
Prepare an income statement for the year. (Input all amounts as positive values. Omit the "$" sign in your response.)

Valenko Company
Income Statement
  Sales correct $ 1096000 
  Cost of goods sold correct 682,000 correct  
  
  Gross margin correct 414000 
  Selling and administrative expenses:
       Administrative expense correct $  correct  
       Selling expenses correct  correct   376,000   
  

  Net operating income correct $ 38,000 correct  
  

12 comments:

  1. How did you get 1096000 for sales on the income statement?

    ReplyDelete
  2. sale = Net operating income + Selling expenses + administrative expenses + Cost of goods sold

    I hope, it will help you in it. If you need more help, please feel free to contact me.

    ReplyDelete
  3. Direct labor = Total manufacturing cost-Manufacturing overhead applied to work in process inventory-Raw materials used in production

    ReplyDelete
    Replies
    1. what if you only have the total actual manufacturing overhead costs?

      Delete
  4. Beginning work in process inventory = Cost of goods manufactured +Ending work in process inventory-Total manufacturing cost

    ReplyDelete
  5. Ending Finished Goods = Unadjusted cost of goods sold - Cost of goods available for sale

    I hope, it will help you in it.

    ReplyDelete
  6. how can we find out the beginning work in process inventory when we need it to calculate the cost of goods manufactured. we can not calculate cost of goods manufactured and we do not know it until we calculate beginning work in process inventory.

    ReplyDelete
  7. How do you get COG Manufactured? 698000?

    ReplyDelete
  8. How do you find underapplied overhead 18000???

    ReplyDelete
  9. How do you find underapplied overhead 18000???

    ReplyDelete
  10. How do you find underapplied overhead 18000???

    ReplyDelete
  11. Actual overhead-applied overhead

    ReplyDelete