[RiveraMylene]

Hi, I would like to seek help in preparing Income Statement, I'm a bit confuse on the following:

Should I present the following as an individual expense or must be part in computing the Factory Overhead? :

Depreciation expense of the machineries& Equipment, Furniture & Fixtures, Tools & Leasehold improvements.
Amortization expense for Computer software & pre-operating expense
Repair & Maintenance of Mach. & Equipt, Furniture& Fixtures, Building, vehicles
Light & Water used in the factory
Rent expense for the Administrative staff
Rent expense for the Factory bldg
Communication used in the factory including expense of the admin staff
Allowance for the Executive and admin , supervisors, managers.

Appreciates your great and prompt help. Many thanks

[morgaine300]

You have different things in that list. There isn't any one answer. Overhead is anything that is not direct material or direct labor, that is for the production process, building, etc. Picture a separate building for production and then another building for the offices. If it's something going on in that production building, then it's a factory cost. (That includes insurance and taxes on the building, janitors, etc.)

In other words, pay attention to what it's for, not what it is. So for something like depreciation, that doesn't tell you anything -- what is the depreciation for? That determines whether it's part of overhead or whether it's a selling or general expense.

As for the income statement, you shouldn't even be making an income statement if you haven't put together all your production costs. What will be on the income statement is cost of goods sold, which isn't just a matter of getting overhead... it's a matter of applying the overhead properly, putting all costs together, and knowing how much got finished, and then how much got sold.

I don't know what all kind of information has been presented in your problem, so I can't answer what process you need to go through to get there.