C 2-34 Income statement and schedule of cost of goods manufactured. The Howell C

Question

C 2-34 Income statement and schedule of cost of goods manufactured. The Howell Corporation following account balances (in millions): For Specific Date For Year 2014 Direct materials inventory, Jan. 1, 2014 Work-in-process inventory, Jan. 1, 2014 Finished goods inventory, Jan. 1, 201.4 Direct materials inventory, Dec. 31, 2014 Work-in-process inventory, Dec. 31, 2014 Finished goods inventory, Dec. 31, 2014 $325 100 70 Depreciation-plant and equipment 80 Purchases of direct materials Direct manufacturing labor $15 10 Plant supervisory salaries 20 5 55 Miscellaneous plant overhead 35 950 240 Revenues Marketing, distribution, and customer-service costs Plant supplies used Plant utilities Indirect manufacturing labor 10 30 60 n income statement and a supporting schedule of cost of goods manufactured for the year ended Prepare a December 31, 2014. (For additional questions regarding these facts, see the next problem.)

Explanation / Answer

Howell Corporation Income Statement for the Year Ended December 31, 2014   (in millions) Revenues            950 Cost of goods sold Beginning finished goods, Jan. 1, 2014             70 Cost of goods manufactured (below)           645 Cost of goods available for sale           715 Ending finished goods, Dec. 31, 2014             55            660 Gross margin            290 Marketing, distribution, and customer-service costs            240 Operating income              50 Howell Corporation Schedule of Cost of Goods Manufactured for the Year Ended December 31, 2014   (in millions) Direct materials costs Beginning inventory, Jan. 1, 2014             15 Purchases of direct materials           325 Cost of direct materials available for use           340 Ending inventory, Dec. 31, 2014             20         Direct materials used            320 Direct manufacturing labor costs            100 Indirect manufacturing costs Indirect manufacturing labor             60 Plant supplies used             10 Plant utilities             30 Depreciation––plant and equipment             80 Plant supervisory salaries               5 Miscellaneous plant overhead             35            220 Manufacturing costs incurred during 2014            640 Add: beginning work-in-process inventory, Jan. 1, 2014              10 Total manufacturing costs            650 Less: ending work-in-process, Dec. 31, 2014                5 Cost of goods manufactured            645

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