Answer:
<u>Part a </u>
Fultz Company
Schedule of cost of goods sold for 2020.
Direct Materials (5,110 x $5) $25,550
Direct Labor (3 x $12 x 5,110) $229,950
Manufacturing overheads (3 x $6 x 5,110) $91,980
Total Cost $347,480
<u>Part b</u>
Fultz Company
Budgeted multiple-step income statement for 2020.
Sales (31,480 x $89) $2,801,720
Less Cost of Sales ($347,480)
Gross Profit $2,454,240
Less Expenses :
Operating Expenses
Selling and administrative expenses ($170,000)
Operating Profit $2,284,240
Less Non-Operating Expenses
Interest expenses ($30,000)
Net Income before Income taxes $2,254,240
Income tax expense ($676,272)
Net Income after Interest and tax $1,577,968
Explanation:
For a manufacturing firm, the cost of goods manufactured automatically becomes the cost of goods sold.
The first step is to calculate units of Raw Materials used. The difference in raw material inventories provides this amount as :
Units of Raw Materials used = 15,380 pounds - 10,270 pounds = 5,110 pounds
Remember a Multi-step Income Statement separates Profit generated from Primary Activities (Operating Profit) of the firm and those from Secondary Activities Activities (Net Income) as shown above.
