West Nautical Company for the most recent year, had the amounts described next.

Question

West Nautical Company for the most recent year, had the amounts described next. Assume that the Raw Materials Inventory contains only direct materials. Calculation of Direct Materials Used, Schedule of Cost of Goods Manufactured, and Calculation of Cost of Goods Sold can be found under the "COSTOFGOODSSOLD" tab.

(Always use cell references and formulas where appropriate to receive full credit. If you copy/paste from the Instruction tab you will be marked wrong.)

Link to XL File: https://docs.google.com/spreadsheets/d/1Z49n3sDSEcV2njGhtK65Z3OmpTmMd911XlxY8vqCxJM/edit?usp=sharing

Explanation / Answer

In the given sheet, the sales revenue is computed as

units sold X price per unit = 34000 X 12 = 408000

Direct Labor is included in the cost of manufacture while indirect labor, insurance, repairs and depreciation are included in the cost of manufacture as overheads. Hence these items do not appear on the income statement. The only 2 expenses that appear as a result are marketing expenses and general and administrative expenses.

The final income statementis completed in the sheet and looks as follows:

Revenue from Sales $408,000 Less: Cost of Goods Sold 2,30,600 Gross Profit $177,400 Less: Operating Costs General and Administrative Income $28,500 Marketing Expenses 77,000 Total Operating Costs $105,500 Operating income $71,900

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