I need help solving this problem. The picture attached is the information which was given. I copy and pasted the part of the problem I need help completing which is asking for the companys income statement. I found the values which were missing in the original information and have copy and pasted those values. Thanks! Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers. Letter On Company Off Company a. $59960 $84830 b. $528820 $271120 c. $549650 $216030 d. $544090 $92710 e. $479010 $457230 f. $345740 $263070 2. Prepare On Company's statement of cost of goods manufactured for December. Statement of Cost of Goods Manufactured For the Month Ended December 31 $ Direct materials: Total manufacturing costs incurred during December Total manufacturing costs $
The first two costs above taken together ( direct materials plus direct labor) are known as the conversion costs of a product. Let's go over a few more key terms we'll see in the manufacturing cost statement: Indirect materials Indirect materials are inventories that are used in the manufacturing process but whose cost is relatively insignificant. For example, in manufacturing a car, the nuts, screws and bolts would be indirect materials. Cleaning materials that are consumed in producing a completed, clean car would also be indirect materials. Indirect materials are recorded separately from direct materials, and actually fall under the category of overheads. Indirect labor Indirect labor is the cost of personnel not directly involved in manufacturing the product, but whose cost forms part of the factory expenses. Included in this are wages and salaries to factory supervisors, cleaners and security guards. Indirect labor is recorded separately from direct labor, and, just like indirect materials, falls under the category of overheads.
Don't worry, I'm going to explain these calculations in detail below.
Brody Company makes industrial cleaning solvents. Various chemicals, detergent, and water are mixed together and then bottled in 10-gallon drums.
For instance, if your gross profit is $400, 000 and your total operating expenses are $200, 000, your operating income is $200, 000. This is your profit from your core business activities. Non-Operating Items The section below operating income shows the items that are not directly related to a manufacturing company's main operations. These might include interest income from bank accounts, interest expenses on loans, gains or losses from selling manufacturing equipment for more or less than its accounting value, income from an insurance settlement and income taxes. Net Income or Loss On the last line of the income statement, a manufacturing company reports its net income or net loss. This represents the overall profit for the period. It equals operating income plus the positive non-operating items minus the negative non-operating items. If your end result is positive, you have net profit. If it is negative, you have a net loss. For instance, if your small business has $200, 000 in operating income and $15, 000 in income taxes, your net income is $185, 000.
Manufacturing companies have several different accounts compared to service and merchandising companies. These include three types of inventory accounts—raw materials, work‐in‐process, and finished goods—and several long‐term fixed asset accounts. A manufacturing company uses purchased raw materials and/or parts to produce a product for sale. At a point in time, the company's inventories consist of raw materials, those materials and parts waiting to be used in production; work‐in‐process, all material, labor, and other manufacturing costs accumulated to date for products not yet completed; and finished goods, the cost of completed products that are ready to be sold. The value of each type of inventory is disclosed in a company's financial statements. The amounts may be shown individually on the face of the balance sheet or disclosed in footnotes. In the long‐term asset section of a manufacturing company's balance sheet, one would expect to find factory buildings and equipment and possibly a small tools account.
The statement totals these three costs for total manufacturing cost during the period. When adding beginning work in process inventory and deducting ending work in process inventory from the total manufacturing cost, we obtain cost of goods manufactured or completed. Cost of goods sold does not appear on the cost of goods manufactured statement but on the income statement. To make the manufacturer's income statement more understandable to readers of the financial statements, accountants do not show all of the details that appear in the cost of goods manufactured statement. Next, we show the income statement for Farside Manufacturing Company. Notice the relationship of the statement of cost of goods manufactured to the income statement. The cost of goods manufactured appears in the cost of goods sold section of the income statement. The cost of goods manufactured is in the same place that purchases would be presented on a merchandiser's income statement. We add cost of goods manufactured to beginning finished goods inventory to derive cost of goods available for sale.
That's it for our lesson on the manufacturing cost statement. At this stage I have to say: Well done! Because not only did you just get through one of the more difficult accounting topics... But you also just completed the final lesson on this site! But... that doesn't mean that you're done with accounting yet. I know, groan. But listen... Accounting is an action. It's something you do, not just something where you learn theory. So if you've not yet done so, you should start practicing accounting to make sure you not only know the theory, but can actually put this into practice. What I'm specifically getting into is that you should practice as many accounting questions and exercises as you can. There are two great free options on this site to help with this: Basic Accounting Questions page Full Questions and Answers (Exercises) page Feel free to go through as many of these questions and exercises as you want. And of course, you can practice a lot more questions and exercises if you get one of our great accounting books or e-books!
PPT - Manufacturing Statement PowerPoint Presentation, free download - ID:4851185 Download Skip this Video Loading SlideShow in 5 Seconds.. Manufacturing Statement PowerPoint Presentation Download Presentation - - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - - Presentation Transcript Manufacturing Statement Exercise 18-12 In order for the animations in the presentation to work properly, be sure to view this presentation as a Slide Show. Manufacturing Statement A statement that summarizes the types and amounts of costs incurred in a company's manufacturing process. Using the Data for Exercise 18-12 on page 765 of your text, we'll create a Manufacturing Statement for Shanta Company.