Question

Yolo Windows, a manufacturer of windows for commercial buildings, reports the following account information for last year (all costs are in thousands of dollars):
Information on January 1 (Beginning):
Direct materials inventory $ 88
Work-in-process inventory 111
Finished goods inventory 1,650
Information for the year:
Administrative costs $ 3,620
Direct labor 12,700
Direct materials purchases 8,210
Factory and machine depreciation 11,740
Factory supervision 734
Factory utilities 965
Indirect factory labor 2,860
Indirect materials and supplies 684
Marketing costs 1,490
Property taxes on factory 281
Sales revenue 45,800
Information on December 31 (Ending):
Direct materials inventory $ 92
Work-in-process inventory 126
Finished goods inventory 1,430
Required:

Prepare an income statement with a supporting cost of goods sold statement. (Enter your answers in thousands of dollars (i.e., 234,000 should be entered as 234).)

Answer 1

Answer:

Instructions are listed below

Explanation:

To determine the cost of sold goods, first, we need to calculate the cost of production for the period.

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= $111

Direct materials = beginning inventory + purchase - ending= 88 + 8210 - 92= $8206

Direct labor= 12700

Manufactured overhead=Factory and machine depreciation + Factory supervision + Factory utilities + Indirect factory labor +

Indirect materials and supplies + Property taxes on factory= 11740+734+965+2860+684+281= $17264

Ending work in progress= 126

Cost of good manufactured= 111 + 8206 + 12700 + 17264 - 126 = $38155

Cost of goods sold=Beginning Inventory+Production during period−Ending Inventory= 1650 + 38155  - 1430= $38375

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

Sales revenue= 45800

Cost of Goods Sold = 38375 (-)

Gross profit= $7425

Administrative costs $ 3,620 (-)

Marketing costs 1,490 (-)

EBITDA= $2315