Answer:
a. $537,300
b. Aikman Company
Income Statement
For the year ended December 31, 2022
Sales Revenue $910,000
Less: Cost of goods sold
Raw material, beginning 21,000
<u>Add:Purchases 150,000 </u>
Raw materials available 171,000
<u>Less: Raw material, end 30,000 </u>
Cost of raw material used 141,000
<u>Add: Direct labor 220,000</u>
Prime Cost 361,000
<u>Add: Factory overhead 180,000 </u>
Manufacturing cost 541,000
Add: Work in process, beginning 13,500
<u>Less: Work in process, Ending 17,200 </u>
Cost of Goods Manufactured 537,300
Add: Finished Goods, beginning 27,000
<u>Less: Finished Goods, Ending 21,000</u>
<u>Cost of Goods Sold 543,300</u>
Gross Profit $366,700
c. Raw materials, ending $30,000
Work in process, ending $17,200
<u>Finished goods, ending $21,000</u>
Total inventory $68,200
d. The difference in the balance sheet and income statement of Aikman Company to Merchandising company is that, Aikman income statement consists of expenses arising from the manufacturing of goods that the merchandising company never incur. In addition to that, Aikman Company has ending inventory of Raw materials, work in process and finished goods while the other merchandising company only has ending inventory of good purchased not yet sold.
Explanation:
a. Aikman's statement of goods manufactured is presented below.
Aikman Company
Statement of Cost of Goods Manufactured
For the year ended December 31, 2022
Raw material, beginning 21,000
<u>Add:Purchases 150,000 </u>
Raw materials available 171,000
<u>Less: Raw material, end 30,000 </u>
Cost of raw material used 141,000
<u>Add: Direct labor 220,000</u>
Prime Cost 361,000
<u>Add: Factory overhead 180,000 </u>
Manufacturing cost 541,000
Add: Work in process, beginning 13,500
<u>Less: Work in process, Ending 17,200 </u>
Cost of Goods Manufactured 537,300
b. Income statement of Aikman starts from the sales revenue that the company incurs for the period and then deduct the cost of goods sold to arrive the gross profit.
c. Aikman's inventory balance consists of Raw materials, work in process and finished goods balances.
