Answer:
a. Statement of cost of goods manufactured.
                                                                         $                           $
Beginning work-in-process inventory                                   13,040
Raw Materials :
Beginning materials inventory                    46,800
Add Purchases of raw materials               320,000
Available for Production                            366,800
Ending materials inventory                         (66,800)         300,000
Direct labor                                                                         200,000
Indirect labor                                                                         40,000
Rent, factory building                                                           42,000
Depreciation, factory equipment                                        60,000
Utilities, factory                                                                       11,900
Ending work-in-process inventory                                      (14,940)
Cost of goods manufactured                                            652,000
b. Average cost of producing one unit of product in the year.
Average cost = Total Cost ÷ Total units produced
                       = $652,000 ÷ 4,000
                       = $163.00
c. Prepare an income statement for external users.
                                                                                              $
Sales (3,800 ×  $400)                                                  1,520,000
Less Cost of Goods Sold ($163.00 × 3,800)                (619,400)
Gross Profit                                                                    900,600
Less Expenses :
Salary, sales supervisor                                                 (90,000
)
Commissions, salespersons                                         (180,000
)
General administration                                                 (300,000)
Net Income / (Loss)                                                        330,600
Explanation:
<u>Determination of  leather recliners sold during the year.</u>
Units Sold = Opening Finished Inventory  + Units Produced - Ending Finished Inventory
                  = 500 + 4,000 - 700
                  = 3,800
Other Notes :
Include only manufacturing costs in the statement of goods manufactured.
External users would want to see an income statement prepared using an absorption costing system in line with financial reporting standards.