Question

Orman Company produces neon-colored covers for tablets (e.g., iPads). For last year, Orman reported the following: Work-in-process inventory, January 1 $ 13,250 Work-in-process inventory, December 31 28,250 Finished goods inventory, January 1 113,000 Finished goods inventory, December 31 85,000 Direct materials inventory, January 1 3,450 Direct materials inventory, December 31 2,700 Direct materials purchased 183,750 Direct labor 138,000 Plant depreciation 19,500 Salary, production supervisor 47,000 Indirect labor 68,300 Utilities, factory 15,700 Sales commissions 42,000 Salary, sales supervisor 75,000 Depreciation, factory equipment 32,000 Administrative expenses 168,000 Supplies (40% used in the factory, 60% used in the sales office) 18,000 Advertising expense 43,600 Last year, Orman produced 89,000 units and sold 90,500 units at $10.50 per unit. Required: 1. Prepare a statement of cost of goods manufactured. Orman Company Statement of Cost of Goods Manufactured For Last Year Direct materials: $ Direct materials used in production $ Manufacturing overhead: $ Total manufacturing costs added $ Cost of goods manufactured $ 2. Prepare an absorption-costing income statement. Orman Company Income Statement: Absorption Costing For Last Year $ Cost of goods sold: $ $ $ Less operating expenses: $ $

Answer 1

Instructions are listed below

Step-by-step explanation:

Giving the following information:

Inventory:

Work-in-process inventory, January 1 $ 13,250

Work-in-process inventory, December 31 28,250

Finished goods inventory, January 1 113,000

Finished goods inventory, December 31 85,000

Direct materials inventory, January 1 3,450

Direct materials inventory, December 31 2,700

Additional information

Direct materials purchased 183,750

Direct labor 138,000

Plant depreciation 19,500

Salary, production supervisor 47,000

Indirect labor 68,300

Utilities, factory 15,700

Sales commissions 42,000

Salary, sales supervisor 75,000

Depreciation, factory equipment 32,000

Administrative expenses 168,000

Supplies (40% used in the factory, 60% used in the sales office) 18,000

Advertising expense 43,600

Last year, Orman produced 89,000 units and sold 90,500 units at $10.50 per unit.

Manufacturing overhead= Plant depreciation + Salary, production supervisor + Indirect labor + Utilities, factory + Depreciation, factory equipment + Supplies (40%)

MOH= 19500 + 47000 + 68300 + 15700 + 32000 + (18000*0.40)= 189700

1) Cost of goods manufactured:

Work-in-process inventory, January 1= $ 13,250

Direct materials inventory, January 1= 3,450

Direct materials purchased= 183,750

Direct materials inventory, December= 31 2,700 (-)

Direct labor 138,000

MOH= 189700

Work-in-process inventory, December 31 28,250 (-)

Total= $497,200

2) COGS cost of goods sold)= beginning finished inventory + cost of goods manufactured - ending finished inventory= 113000 + 497200 - 85000= 525200

Income Statement:

Sales= 90500+10.5= 950,250

COGS= 525,200

Gross profit= 425050

Sales commissions 42,000

Salary, sales supervisor 75,000

Administrative expenses 168,000

Supplies(60%) 10,800

Advertising expense 43,600

Total= 339,400

Net operating profit= $85,650