2-33 Cost of goods manufactured, income statement, manufacturing company. Consid

Question

2-33 Cost of goods manufactured, income statement, manufacturing company. Consider the following account balances (in thousands) for the Piedmont Corporation: 1. Prepare a schedule for the cost of goods manufactured for 2011. 2. Revenues for 2011 were $600 million. Prepare the income statement for 2011

Piedmont Corporation 2011 2011 Direct materials inventory 65,000 34,000 Work-in-process inventory 83,000 72,000 Finished goods inventory 123,000          102,000 Purchases of direct materials 128,000 Direct manufacturing labor 106,000 Indirect manufacturing labor 48,000 Indirect materials 14,000 Plant insurance 2,000 Depreciation—plant, building, and equipment 21,000 Plant utilities 12,000 Repairs and maintenance—plant 8,000 Equipment leasing costs 32,000 Marketing, distribution, and customer-service costs 62,000 General and administrative costs 34,000

Explanation / Answer

Piedmont Corporation Income Statement for the Year Ended December 31 Amount in Thousands Revenue $600,000 Cost of Good sold Beginning finished goods, Jan. 1, 2011 $102,000 Cost of goods manufactured (below) $329,000 Cost of goods available for sale $431,000 Ending finished goods, Dec. 31, 2011 -$103,000 Gross margin $328,000 Marketing, distribution, and customer-service costs -$62,000 General and administrative costs -$34,000 Operating income $232,000 Piedmont Corporation Schedule for the cost of goods manufactured for 2011 Direct materials costs: Beginning inventory, Jan. 1, 2011 $34,000 Purchases of direct material $128,000 Cost of direct materials available for use $162,000 Ending inventory, Dec. 31, 2011 -$65,000 Direct materials used $97,000 Direct manufacturing labor cost $106,000 Indirect manufacturing costs: Indirect manufacturing labor $48,000 Indirect materials $14,000 Plant insurance $2,000 Depreciation—plant, building, and equipment $21,000 Plant utilities $12,000 Equipment leasing costs $32,000 Repairs and maintenance—plant $8,000 $137,000 Manufacturing costs incurred during 2011 $340,000 Add beginning work-in-process inventory, Jan. 1, 2011 $72,000 Total manufacturing costs to account for $412,000 Deduct ending work-in-process, Dec. 31, 2011 -$83,000 Cost of goods manufactured $329,000

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