Question

The following information pertains to Flaxman Manufacturing Company for April. Assume actual overhead equaled applied overhead. April 1 inventory balances: Raw materials 123,300, Work in process118,800, Finished goods 77,800. April 30 inventory balances: Raw materials86,500, Work in process 145,400, Finished goods81,600. During April, costs of raw materials purchased 119,300, costs of direct labor100,800, costs of manufacturing overhead 61,600, sales revenues356,000. Required: Prepare a schedule of cost of goods manufactured and sold. Calculate the amount of gross margin on the income statement.

Answer 1

To calculate the gross margin, the cost of goods sold (COGS) is subtracted from sales revenues. With given inventory balances, purchases, and costs, the COGS for Flaxman Manufacturing Company amounts to $288,100. The gross margin on the income statement is then $356,000 - $288,100 = $67,900.

Step-by-step explanation:

Schedule of Cost of Goods Manufactured and Sold

To prepare a schedule of cost of goods manufactured and sold, start with the beginning inventory balances and add the costs incurred during the period. Then subtract the ending inventory balances to find the cost of goods sold (COGS). Afterwards, we can calculate the gross margin by subtracting COGS from sales revenues.

Calculations for COGS:

• Beginning raw materials: $123,300
• + Raw materials purchased: $119,300
• - Ending raw materials: $86,500
• = Materials used: $156,100
• + Direct labor: $100,800
• + Manufacturing overhead: $61,600
• + Beginning work in process: $118,800
• - Ending work in process: $145,400
• = Cost of goods manufactured: $291,900
• + Beginning finished goods: $77,800
• - Ending finished goods: $81,600
• = Cost of goods sold: $288,100

Calculating Gross Margin:

Sales revenues: $356,000 -COGS: $288,100 = Gross margin: $67,900