Santana Rey, owner of Business Solutions, decides to diversify her business by a

Question

Santana Rey, owner of Business Solutions, decides to diversify her business by also manufacturing computer workstation furniture. Required: 1. Classify the following manufacturing costs of Business Solutions as (a) variable or fixed and (b) direct or indirect. 2. Prepare a schedule of cost of goods manufactured for the month ended January 31, 2016. Direct materials: $2,300 Factory overhead: $500 Direct labor: $1,100 Beginning work in process: none (December 31, 2015) Ending work in process: $580 (January 31, 2016) Beginning finished goods inventory: none (December 31, 2015) Ending finished goods inventory: $340 (January 31, 2016) 3. Prepare the cost of goods sold section of the income statement for Business Solutions for the month ended January 31, 2016.

Explanation / Answer

1)

2) Cost of Goods Manufactured Statement:

Santana Rey,

Shedule of Cost of Goods Manufactured Statement

for the month end of January 31,2016

3) Cost of Goods Sold Statement:

Direct Material $2,300 Variable & Direct Factory Overheads $500 Fixed & Indirect Direct Labour $1,100 Variable & Direct

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