Answer and Explanation:
The preparations are as follows:
1) For Cost of goods manufactured
Opening Work in process inventory $108,800
Direct materials:
Opening inventory $77,250
Add: Purchases $123,800
Cost of materials available for use $201,050
Less: Ending inventory - $93,600
Cost of direct materials used $107,450
Add: Direct labor $186,100
Factory overhead
Indirect labor $23,800
Depreciation expense - factory equipment $14,600
Heat, light, and power - factory $5,550
Property taxes - factory $4,145
Rent expense - factory $6,550
Supplies - factory $4,750
Miscellaneous cost - factory $4,420
Total factory overhead $63,815
Total manufacturing costs spent $357,365
Total manufacturing costs $466,165
Less: ending work in process inventory -$96,700
Cost of goods manufactured $369,465
2. For Income statement
Sales $861,500
Less: Cost of goods sold:
Opening finished goods inventory $112,500
Add: Cost of goods manufactured $369,465
Cost of finished goods available for sale $481,965
Less: Ending finished goods inventory -$108,400
Cost of goods sold $373,565
Gross profit $487,935
Less: Operating expenses:
Administrative expenses:
Office salaries expense $78,300
Depreciation expense - office equipment $23,000
Property taxes - office building $13,800
Selling expenses:
Advertising expense $67,800
Sales salaries expense $138,500
Total operating expenses $321,400
Net income $166,535
