Problem 2. The Jiffy Manufacturing Company started operations in 2012 when it ac

Question

Problem 2. The Jiffy Manufacturing Company started operations in 2012 when it acquired $100,000 from its owners. During the year, the company incurred the following costs:

RAW MATERIALS USED                                   $40,000

LABOR                                                                  $ 50,000

OVERHEAD                                                          $20,000

SELLING AND ADMISTRATIVE COSTS         $30,000
The company placed 12,000 units into production, completed 10,000 units, and sold 8,000 units. The average selling price was $17 per unit.

Required:

1) Prepare a schedule of cost of goods manufactured and sold for the year ended December 31, 2012.
2) Prepare an income statement for the year ended December 31, 2012.

Explanation / Answer

1) Work in process at end = 12000 -10000 completed = 2000

Units sold : 10000 completed - 8000 sold = 2000 ending inventory

2)

Income statement

for the year ended december 31,2012

Cost of goods manufactured Beginning work in process 0 Raw material used 40,000 Labor 50,000 Overhead 20,000 Total manufacturing cost incurred 110000 Less:Ending work in process [110000*2000/12000] -18333 Cost of goods manufactured 91667

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