The following selected information was extracted from the 20x1 accounting records of Lone Oak Products:
Raw material purchases ................................ $ 175,000
Direct labor ......................................................... 254,000
Indirect labor ...................................................... 109,000
Selling and administrative salaries .................. 133,000
Building depreciation ........................................... 80,000
Other selling and administrative expenses ..... 195,000
Other factory costs ............................................. 344,000
Sales revenue ($130 per unit) ........................ 1,495,000
Seventy-five percent of the company’s building was devoted to production activities; the remaining 25 percent was used for selling and administrative functions.
Inventory data:
January1 December31
Raw material 15800 18200
Work in process 35700 62100
Finished goods 111100 97900
The January 1 and December31 finished-goods inventory consisted of 1,350 units and 1,190 units, respectively.
Required:
1. Calculate Lone Oak’s manufacturing overhead for the year.
2. Calculate Lone Oak’s cost of goods manufactured.
3. Compute the company’s cost of goods sold.
4. Determine net income for 20x1, assuming a 30% income tax rate.
5. Determine the number of completed units manufactured during theyear.

Answer :

Answer:

1. $513,000

2. $913,200

3. $926,400

4. $154,420

5.11340 Units

Explanation:

1. Calculation for Lone Oak’s manufacturing overhead for the year.

Manufacturing overhead

Indirect labor 109,000

Building depreciation (80000*75%) 60,000

Other factory cost 344,000

Manufacturing overhead $513,000

2. Calculation for Lone Oak’s cost of goods manufactured.

First step is to calculate the Direct material used

Direct material used = 15,800+175000-18200

Direct material used= 172,600

Second step is to calculate the Total manufacturing cost

Total manufacturing cost = 172,600+254,000+513,000

Total manufacturing cost= 939,600

Now let calculate the Cost of goods manufactured

Cost of goods manufactured = 35,700+939,600-62100

Cost of goods manufactured = $913,200

3. Compution for the company’s cost of goods sold.

Cost of goods sold = 111100+913,200-97900

Cost of goods sold = $926,400

4. Calculation to Determine net income for 20x1, assuming a 30% income tax rate.

Net income :

Sales 1495000

Cost of goods sold -926,400

Gross profit 568,609

Selling and administrative expense (133000+20000+195000) 348000

Profit 220,600

Tax 30% 66,180

Net income $154,420

(220,600-66,180)

(25%*80,000=20,000)

5. Calculation to Determine the number of completed units manufactured during theyear.

No of unit completed = 1190+(1,495,000/$130 per unit)-1350

No of unit completed =1190+11500-1350

No of unit completed = 11340 Units

anthougo

1. The calculation of Lone Oak's manufacturing overhead for the year is $513,000.

2. The calculation of Lone Oak's cost of goods manufactured is $913,200.

3. The computation of Lone Oak's cost of goods sold is $926,400.

4. The net income for 20x1 with a 30% income tax rate is $247,520.

5. The number of completed units manufactured during the year is 11,340 units.

Data and Calculations:

Raw material purchases = $175,000

Direct labor = $254,000

Indirect labor = $109,000

Selling and administrative salaries = $133,000

Building depreciation =$80,000

Factory Depreciation = $60,000 ($80,000 x 75%)

Selling and administration Depreciation = $20,000 ($80,000 x 25%)

Other selling and administrative expenses = $195,000

Other factory costs = $344,000

Sales revenue ($130 per unit) = $1,495,000

Inventory data:

                                  January 1       December  31

Raw material              $15,800             $18,200

Work in process        $35,700             $62,100

Finished goods          $111,100            $97,900

Units of finished goods 1,350                  1,190

Manufacturing Overhead:

Indirect labor = $109,000

Factory depreciation = $60,000 ($80,000 x 75%)

Other factory costs = $344,000

The total manufacturing overhead = $513,000.

Raw material:

Account titles                        Debit       Credit

Beginning balance              $15,800

Purchase of raw materials  175,000

Work in process                              $172,600

Ending balance                                  $18,200

Work in process

Account titles                     Debit       Credit

Beginning balance        $35,700

Raw materials                172,600

Direct labor                  254,000

Manuf. overhead          513,000

Finished goods                              $913,200

Ending balance                                 $62,100

Finished goods

Account titles                     Debit       Credit

Beginning balance          $111,100

Work in process              913,200

Cost of goods sold                      $926,400

Ending balance                               $97,900

Lone Oak's Income Statement

Sales Revenue             $1,495,000

Cost of goods sold          926,400

Gross profit                   $568,600

Expenses:

Selling and distribution $195,000

Depreciation                     20,000

Total expenses             $215,000

Income before tax      $353,600

Tax (30%)                        106,080

Net income                 $247,520

Units of finished goods:

Ending balance                1,190

Units sold                       11,500 ($1,495,000/$130)

Total available for sale 12,890

Beginning balance          1,350

Units sold =                   11,340

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