Harvey Company manufactures a small engine. During Year3, Harvey completed 1000
ID: 2334759 • Letter: H
Question
Harvey Company manufactures a small engine. During Year3, Harvey completed 1000 engines. Harvey incurred the following costs $80000 for cost of materials for the engines $120000 for the cost of salaries related to manufacturing $58000 for the depreciation on administrative equipment $140000 for the depreciation cost related to manufacturing equipment Harvey had no inventory on hand at the beginning of Year3. The cordpany sold 200 engines during Year3. Round your final answers to the nearest dollar, if needed. Do not include any commas or other punctuation in your answer. Do not enter expenses as negative numbers What will Harvey report as Depreciation expense on the Year3 income statement? What will Harvey report as cost of goods sold on the Year 3 income statement?Explanation / Answer
1) calculation of depreciation harvey reports on income statement
depreciation on administation equipment =$58000
depreciation on manufacturing equipment =$140,000
TOTAL =$198,000
2) calculation of cost of goods sold for 200 engines
cost of materials =$80000/1000*200 =$16000
cost of salaries =$120,000
depreciation on manufacturing equipment =$140,000
TOTAL cost of goods sold =$276,000
ANSWERS
1. harvey report as depreciation on income statement =$198,000
2. harvey reports as cost of goods sold on income statement =$276,000
note : fixed costs does not changed with the production volume . so depreciation on manufacturing equipment and salaries of factory remains fixed
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