Nutini Shoes Company Income Statement For the Month Ending August 31 $450,000 Sa

Question

Nutini Shoes Company Income Statement For the Month Ending August 31 $450,000 Sales Less operating expenses $70,000 Direct labor cost Raw materials purchased 165,000 Manufacturing overhead Selling/ admin. expenses142,000462,000 85,000 Net operating loss August 1 August 31 Raw Materials Work in process Finished goods $8,000 $13,000 $16,000 $21,000 $40,000 $60,000 That's not right! Something is wrong. Can you correct this income statement? Nutini Shoes Company Income Statement Raw material used For the Month Ending August 31 Cost of Goods Manufactured Cost of Goods Sold

Explanation / Answer

1)

Income statement

For the month ending august 31

3)

2)Product cost are those cost that are related to manufacturing of product whereas period cost are those cost which are charged to revenue in the year in which it is incurred and not added to cost of product.

They need to differentiated as product cost is added to cost of product whereas period cost are not.

3)product cost are also called "Inventoriable cost"

Raw material used Beginning raw material 8000 purchase 165000 less:ending raw material (13000) Raw material used 160000 Direct labor cost 70000 Manufacturing overhead 85000 Total manufacturing overhead 315000 beginning WIP 16000 Less:ending WIP (21000) COst of goods manufactured 310000 beginning finished goods 40000 less:ending finished goods (60000) cost of goods sold 290000

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