Question

The following information is available for Aikman Company. January 1, 2017 December 31, 2017 2017Raw materials inventory $24,180 $32,660Work in process inventory 20,720 18,070Finished goods inventory 30,180 28,890Materials purchased $153,550 Direct labor 221,820 Manufacturing overhead 184,970 Sales revenue 904,710 a. Compute cost of goods manufactured.b. Prepare an income statement through gross profit.c. Show the presentation of the ending inventories on the December 31, 2017, balance sheet.

Answer 1

Answer:

a. Cost of Goods Manufactured       $554,510

b. Gross profit                                    $348,910

c. Presentation of ending Inventory

Assets

Long Term Assets

Current Assets

Inventory                                              $79,620

Explanation:

a. Cost of goods manufactured

Direct material

Raw Material at January 1,2017                                       $24,180

Add: Purchases for the year                                            $153,550

Less: Raw Material at December 31,2017                       $32,660  

Material used in production                                            $145,070

Direct Labour                                                                   $221,820

Manufacturing overhead                                                 $184,970

Total Manufacturing cost                                                 $551,860

Add:Work in process inventory at January 1,2017         $20,720

Less: Work in process inventory at December 31,2017 $18,070

Cost of Goods Manufactured                                         $554,510

b. Income statement through gross profit

Sales revenue                                                                   $904,710

Less : Cost of Goods sold

Cost of Goods manufactured                          $554,510

Add: Finished Goods at at January 1,2017     $30,180

Less: Finished Goods at December 31,2017 $28,890

                                                                                           $555,800

Gross Profit                                                                        $348,910

c. Ending Inventory = $32,660 + $18,070 + $28,890 = $79,620