The following information is available for the Brown Company for the month ended
ID: 2337759 • Letter: T
Question
The following information is available for the Brown Company for the month ended July 31:
1.) Determine the direct materials used in July.
2.) Determine costs of goods manufactured in July.
3.) Determine costs of goods sold in July.
4.) Prepare an income statement for July (Ignore taxes).
Direct materials purchased $21,000 Direct labor (2,500 hrs@$12) $30,000 Indirect labor $3,000 Indirect materials $2,500 Office supplies expense $100 Factory equipment depreciation $2,000 Office equipment depreciation $750 Administrative expenses $20,000 Office utilities $75 Factory utilities $200 Marketing expense $2,500 Sales revenue $150,000 Sales commissions expense $1,500Explanation / Answer
1 Direct materials inventory Beginning 27000 Add: Direct materials purchased 21000 Total materials available 48000 Less:Direct materials inventory, Ending 24500 Direct materials used 23500 2 Direct materials used 23500 Direct labor 30000 Manufacturing overhead: Indirect labor 3000 Indirect materials 2500 Factory equipment depreciation 2000 Factory utilities 200 Total Manufacturing overhead 7700 Total manufacturing costs 61200 Add: Work in process inventory, beginning 25000 Less: Work in process inventory, ending 29000 Cost of goods manufactured 57200 3 Finished goods inventory, beginning 22000 Add: Cost of goods manufactured 57200 Cost of goods available for sale 79200 Deduct: Finished goods inventory, ending 15000 Cost of goods sold 64200 4 Income Statement For the month ended July 31 Sales revenue 150000 Cost of goods sold 64200 Gross margin . 85800 Selling and administrative expenses: Office supplies expense 100 Office equipment depreciation 750 Administrative expenses 20000 Office utilities 75 Marketing expense 2500 Sales commissions expense 1500 24925 Net operating income 60875
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