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12 April, 22:22

The following data pertain to Babor Company for the fiscal year ended December 31: Prior December 31 Current December 31 Purchases of materials $ 197,500 Direct labor 130,250 Indirect labor 51,500 Factory insurance 9,300 Depreciation-factory 36,250 Repairs and maintenance-factory 14,900 Marketing expenses 148,550 General and administrative expenses 87,950 Materials inventory $ 29,500 64,750 Work-in-Process inventory 16,250 18,600 Finished Goods inventory 18,300 24,400 Sales in the current year were $660,000. Required: Prepare a schedule of cost of goods manufactured and an income statement for the current year for Babor Company.

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  1. 12 April, 22:46
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    Answer and Explanation:

    The preparation is presented below:

    Babor Company

    Cost of Goods Sold Statement

    For the fiscal year ended December 31

    Beginning work-in-process inventory $16,250

    Manufacturing costs:

    Direct materials:

    Beginning inventory $29,500

    Purchases $197,500

    Materials available $227,000

    Less: Ending inventory - $64,750

    Direct materials used $162,250

    Direct labor $130,250

    Other manufacturing costs

    Indirect labor $51,500

    Factory insurance $9,300

    Depreciation - factory $36,250

    Repairs and maintenance - factory $14,900

    Total of other manufacturing cost $111,950

    Total manufacturing costs: $404,450

    Total costs of work-in-process $420,700

    Less: Ending work-in-process - $18,600

    Cost of goods manufactured $402,100

    Beginning finished goods inventory $18,300

    Finished goods available for sale $402,400

    Less: Ending finished goods inventory - $24,400

    Cost of goods sold $396,000

    Babor Company

    Cost of Goods Sold Statement

    For the fiscal year ended December 31

    Sales $660,000

    Less: Cost of goods sold - $396,000

    Gross profit $264,000

    Less: Marketing expenses - $148,550

    Less: General and administrative expenses - $87,950

    Net operating income $27,500
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