Orlando Manufacturing had the following data for the period just ended: Work in

Question

Orlando Manufacturing had the following data for the period just ended:

Work in Process, Jan 1 $ 15,000
Work in process, Dec 31 30,000
Finished Goods, Jan 1 60,000
Finished Goods, Dec 31 65,000
Direct Materials used 120,000
Direct Labor 220,000
Factory Depreciation 68,000
Sales 950,000
Selling and Gen & Admin Exp 198,000
Factory Utilities 25,000
Indirect Materials 19,000
Indirect Labor 33,000
Income Tax rate= 40%

Required:
A. Calculate Orlando's Cost of Goods Manufactured
B. Calculate Orlando's Cost of Goods Sold
C. Prepare an Income Statement

Explanation / Answer

A) Cost of Goods Manufactured

15,000(work in process, Jan 1) + 120,000(direct material) + 220,000(direct labor) + [68,000(factory depreciation) + 25,000(factory utilities) + 19,000(indirect materials) + 33,000(indirect labor)](matufacturing overhead) - 30,000(work in process, Dec 31) = 470,000

B) Cost of Goods Sold

60,000(finished goods, Jan 1) + 470,000(Cost of Goods manufactured) - 65,000(finished goods, Dec 31) = 465,000

C)

                        Orlando Manufacturing

                          Income Statement

                     For the year ended Dec 31, 2010 <-- I assumed this is for 2010

          Sales                                                     950,000

          Less:Cost of Goods Sold                          465,000

          Gross Profit                                          485,000

          Selling and Gen & Admin Exp                  198,000

           Operating Income                                  287,000

           Income Tax Expense                             114,800 <-- 287,000 * 40%

           Net Income                                          172,200          

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