How to do cost goods maufactured and a income statement for a manufacturing firm
A Company has just completed its operations for September 1989.
Income statement of the month's activities:
Income statement for the month ended 30 September 1989
Sales 450 000
Less: Operating expenses: 476 000
Inderect labour cost 12 000
Electricity and water 15 000
Direct labour cost 90 000
Depreciation: factory equipment 21 000
Raw materials purchased 159 000
Depreciation: sales equipment 18 000
Insurance 4 000
Rent 50 000
Selling and administraive salaries 32 000
Advertising 75 000
Net loss 26 000
You have been asked to check the statement and make corrections as needed.
You have discovered the following additional information.
The Company is a manufacturing firm.
Some 60% of the electricity and water and 75% of the insurance apply to factory operations, the remaining amounts apply to selling and administrative activities.
Balances in the stock accounts at thee beginning and end of the month were:
1/9/1989 30/9/1989
Raw materials 8 000 27 000
Work in progress 16 000 21 000
Finished goods 40 000 60 000
Only 80% of the rent applies to the factory operations.
Required:
Prepare a schedule for cost of goods manufactured, in good form, for September 1989.
Prepare a correct income statement for the month.
