Answer:
Cost of good manufactured= 1865176
Net Income= 526272
Explanation:
A) To calculate the cost of manufactured goods we need to use the following formula:
Cost of good manufactured= Beginning work in progress+ direct materials of the period + direct labor + manufactured overhead - ending work in progress
Beginning work in progress= $32,500
Direct materials = beginning inventory + purchase - ending inventory= 19,888+ 425,808- 22,500= $423196
Direct labor= $524,800
Manufactured overhead=(Depreciation expense-plant and equipment) + Indirect labor + Insurance on plant + Heat and light for plant + (Supervison's salary-plant) + (Supplies-plant) + Repairs on plant building
= 323,000+275,880+33,800+23,200+98,900+132,680+37,500=$924960
Ending work in progress= 40,280
Cost of good manufactured=32500+423196+524800+924960-40280= $1865176
Expenses that are outside of the manufacturing facilities, such as selling, general and administrative expenses, are not product costs. They are reported as expenses on the income statement in the accounting period in which they occur.
2)
The general structure of an income statement proceeds as follow:
Revenue/Sales (+)
Cost of Goods Sold (COGS) (-)
=Gross Profit
Marketing, Advertising, and Promotion Expenses (-)
General and Administrative (G&A) Expenses (-)
=EBITDA
Depreciation & Amortization Expense (-)
=Operating Income or EBIT
Interest (-)
Other Expenses (-)
=EBT (Pre-Tax Income)
Income Taxes (-)
=Net Income
First, we need to calculate the cost of goods sold
COGS=Beginning Inventory+Production during period−Ending Inventory=55680+1865176-44288= $1876568
<u>Income Statement:</u>
Revenue=2947000
COGS=1876568 (-)
Gross profit= 1070432
Marketing, Advertising, and Promotion Expenses= 15380 (-)
Administrative (G&A) Expenses= 78900+326500= 405400 (-)
EBITDA= 649652
Depreciation= 76280+47100= 123380 (-)
Net income= $526272
