The following data refer to Laredo Luggage Company for the year 20x2 Sales reven
ID: 2488001 • Letter: T
Question
The following data refer to Laredo Luggage Company for the year 20x2 Sales revenue Work-in-process inventory, December 31 Work-in-process inventory, January 1 Selling and administrative expenses Income tax expense Purchases of raw material Raw-material inventory December 31 Raw-material inventory, January 1 Direct labor Utilities: plant Depreciation: plant and equipment Finished-goods inventory, December 31 Finished-goods inventory, January 1 Indirect material used Indirect labor Other manufacturing overhead $1,000,000 30,000 32,000 150,000 80,000 170,000 25,000 40,000 190,000 40,000 50,000 50,000 10,000 8,000 12,000 60,000Explanation / Answer
1.
LAREDO LUGGAGE COMPANY
SCHEDULE OF COST OF GOODS MANUFACTURED
FOR THE YEAR ENDED DECEMBER 31, 20X2
Raw-material inventory, January 1
$ 40,000
Add: Purchases of raw material
$ 170,000
Raw material available for use
$ 210,000
Deduct: Raw-material inventory, December 31
$ 25,000
Raw material used
$ 185,000
Direct labor
$ 190,000
Manufacturing overhead:
Indirect material
$ 8,000
Indirect labor
$ 12,000
Utilities: plant
$ 40,000
Depreciation: plant and equipment
$ 50,000
Other
$ 60,000
Total manufacturing overhead
$ 170,000
Total manufacturing costs
$ 545,000
Add: Work-in-process inventory, January 1
$ 32,000
Subtotal
$ 577,000
Less: Work-in-process inventory, December 31
$ 50,000
Cost of goods manufactured
$ 527,000
2.
LAREDO LUGGAGE COMPANY
SCHEDULE OF COST OF GOODS SOLD
FOR THE YEAR ENDED DECEMBER 31, 20X2
Finished goods inventory, January 1
$ 10,000
Add: Cost of goods manufactured
$527,000
Cost of goods available for sale
$ 537,000
Deduct: Finished-goods inventory, December 31
$50,000
Cost of goods sold
$ 487,000
3.
LAREDO LUGGAGE COMPANY
INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 20X2
Sales revenue
$ 1,000,000
Less: Cost of goods sold
$ 487,000
Gross margin
$ 513,000
Selling and administrative expenses
$ 150,000
Income before taxes
$ 363,000
Income tax expense
$ 80,000
Net income
$ 283,000
LAREDO LUGGAGE COMPANY
SCHEDULE OF COST OF GOODS MANUFACTURED
FOR THE YEAR ENDED DECEMBER 31, 20X2
Raw-material inventory, January 1
$ 40,000
Add: Purchases of raw material
$ 170,000
Raw material available for use
$ 210,000
Deduct: Raw-material inventory, December 31
$ 25,000
Raw material used
$ 185,000
Direct labor
$ 190,000
Manufacturing overhead:
Indirect material
$ 8,000
Indirect labor
$ 12,000
Utilities: plant
$ 40,000
Depreciation: plant and equipment
$ 50,000
Other
$ 60,000
Total manufacturing overhead
$ 170,000
Total manufacturing costs
$ 545,000
Add: Work-in-process inventory, January 1
$ 32,000
Subtotal
$ 577,000
Less: Work-in-process inventory, December 31
$ 50,000
Cost of goods manufactured
$ 527,000
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