Answer:
Peterson Company
1. A schedule for the cost of goods manufactured for 2017:
A. Peterson Company
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2017 (in thousands)
Beginning direct materials inventory 21,000
less ending direct materials inventory (23,000)
Beginning Work-in-process inventory 26,000
less ending work in process inventory (25,000 )
Purchases of direct materials 74,000
Direct manufacturing labor 22,000
Indirect manufacturing labor 17,000
Plant insurance 7,000
Depreciation - plant, building, & equipment 11,000
Repairs and maintenance - plant 3,000
Total cost of manufactured goods $133,000
B. Peterson Company
Schedule of Cost of Goods Manufactured
For the Year Ended December 31, 2017 (in thousands)
Direct materials
Beginning direct materials inventory 21,000
Purchases of direct materials 74,000
Cost direct materials available 95,000
less ending direct materials inventory 23,000
Direct materials used 72,000
Direct manufacturing labor 22,000
Indirect manufacturing costs:
Labor 17,000
Depreciation 11,000
Plant Insurance 7,000
Repairs and maintenance 3,000
Total Indirect manufacturing costs 38,000
Manufacturing costs incurred during 2017 $132,000
Beginning work in process inventory 26,000
Total costs to account for $158,000
less ending work in process inventory 25,000
Cost of goods manufactured $133,000
2. Peterson Company
Income Statement
For the Year Ended December 31, 2017 (in thousands)
Sales Revenue $310,000
Cost of goods sold:
Beginning Finished goods inventory 13,100
Cost of goods manufactured 133,000
Cost of goods available for sale $146,100
less ending Finished goods inventory 20,000
Cost of goods sold $126,100 126,100
Gross profit $183,900
Operating costs :
Selling & Distribution costs 91,000
General & Admin. costs 24,000
Total operating costs $115,000
Operating income (loss) $68,900
Explanation:
The cost of manufactured goods is the sum of the costs of direct materials, direct labor, manufacturing overhead, and work in process inventory.
The cost of goods for sale is the sum of the beginning finished goods inventory plus the cost of manufactured goods less the ending finished goods inventory.
The income statement is a statement of revenue and costs in order to show the financial performance of an entity during a period of time. It shows the gross profit and net operating profit or loss.
The Gross profit is the difference between Sales Revenue and the Cost of goods sold.
The Operating Profit (Loss) is the difference between the Gross profit and the Operating costs.