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This is the cost of one loveseat at the beginning of the year. Based on this, we can calculate the number of loveseats seat manufactured as
Cost of goods manufactured ………………. $1,304,000
Divided by: $267
Number of loveseats manufactured = 1304000/267 = 4883
Add: beginning number of loveseats available = + 600
Total number of loveseats available for sale = 5483
Less: loveseats available at the end of the year = - 800
Total number of loveseats sold = 4683

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You got this one wrong. It should not be this complicated. Here's the formula you should use.
Number of Seats Sold = Beginning + Produced - Ending
All the items in the formula are given.

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B.H. Roberts Company produced 4,000 loveseats during the year. The loveseats sell for $800 each. Roberts had 600 loveseats in finished goods inventory at the beginning of the year. At the end of the year, there were 800 loveseats in finished goods inventory. Roberts accounting records provide the following information

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Number 9 and 10 are perfect :)

In addition,

Average Cost of Producing One Loveseat in the Current Period = Cost of Goods Manufactured divided by Number of Loveseats Produced in the Current Period.

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B.H. Roberts Company produced 4,000 loveseats during the year

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Criado,

So are you saying the number of loveseats produced in the current period is 4000 loveseats so I do not need to compute anything?

pmonica

This means the average cost of producing one loveseat is 1304000/4000 = $326

Am I right?

pmonica

and the total number of loveseats sold in the current period is

Number of loveseats sold = Beginning + produced - Ending
= 600 + 4000 - 800
= 3800 loveseats

Am I on the right track here?

You got them right! :)

Criado,

Is there a difference between manufacturing cost of goods sold and manufacturing cost incurred or do the mean the same thing?

pmonica

Thanks, I now understand.

Can you now look at the income statement I prepared and advise me, please?

Also, in this case did the company se lifo or fifo, how do I determine that?

I am unsure of how I came up with my sales figure,
Did I use the correct formula and is my computation correct?

I think sales should be calculated as follows:
the total number of loveseats sold in the current period* selling price
3800 * 800 = $3040000

am I thinking right?

This is my new income statement, please advise

Sales is calculated as
Total # of loveseats sold in the current period = 3800
Multiplied by selling price of one loveseat = $800
Sales = 3800* 800 = $3,040,000
Sales…………………………………………………………………………… $3,040,000

Less expenses:
Cost of services sold:
Beginning work in process …………………………………… 26, 080
Service cost added:
Direct materials …………………………………………………………… 600,000
Direct labor ………………………………………………………………… 400,000
Overhead …………………………………………………………………… 307,912 1,307,912
Total ……………………………………………………………………………… 1,333,992
Less: Ending work in process …………………………………………………………… 29,992 $1,304,000
Gross margin …………………………………………………………………………………………….. $1,736,000
Less operating expenses:
Selling expenses:
Salary, sales supervisor ……………………………………………………………. 180,000
Add: Commissions, sales persons ……………………………………………… 360,000
Selling expenses = 180000 + 360000 = 540,000
Selling expenses ………………………………………………………………… 540, 000
Administrative expenses ……………………………………………………….. 600,000 $1,140,000
Income before income taxes ……………………………………………….. $596,000

This is how I computed the manufacturing cost of goods sold, am on the right track?

14. Manufacturing cost of goods sold is calculated as follows
Total number of loveseats sold in the current period = 3800
Multiplied by the average cost of one loveseat in the current period = $326
Manufacturing cost of goods sold = 3800*326
= $1,238,800

Nope; remember that in your inventory; you have 600 loveasets that worth $267 each and 4,000 loveseats that worth 326 each. During that time that you sold 3,800 we don't know which are the ones that are sold and which are not.

Please go back to your post #10. You already computed for Cost of Goods Sold and I confirm that your computation is correct.

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Thank you. I did not realize it was that simple. You are a great tutor for me.

These are my remaining questions for my assignment this week.
How do I Calculate the cost of goods available for sale.

I worked it out this way, is this right

The cost of goods available for sale is calculated as follows
Finished goods inventory, December 31, 2005 ………………… $160,000
Add: Cost of manufactured goods …………………………………….. $1,304,000
Cost of available goods for sale ……………………………………… $1,464,000

Determine the cost of goods sold.

Is this right?
Cost of goods sold is calculated as follows:
Cost of goods sold = cost of goods available – ending inventory balance
Cost of goods available……………………………………. $1,464,000
Less: Finished goods inventory December 31, 2006 …….. 228,200
Cost of goods sold $1,235,800

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Thanks criado,

In this case how do I compute the sales figure for the income statement?

Can we not assume that out of the available loveseats for sale, each one was sold for $800

Sales is computed as number of seats sold (you already computed this previously) multiplied by selling price (which is given above).

Definitely. As the problem gave, each one of the seats sold was sold at $800 each. :)

I don't know why I am missing to read some of your post from time to time.

Regarding your Income Statement, it is perfect. :)

Criado,

I want to thank you for helping me through this assignment.

Now for the lifo, fifo part, which on is used in the inventory account, how do I determine that?

Now the average cost for producing one love seat in the current period = $326
Cost of one loveseat (beginning) = $267
Cost of one loveseat (ending) = $285

Based on these figures, how can I determeine whether LIFO or FIFO is being used?