Manufacturing Income Statement, Statement of Cost of Goods Manufactured

Several items are omitted from the income statement and cost of goods manufactured statement data for two different companies for the month of December 2014:

	Grant Company		McClellan Company
Materials inventory, December 1	$76,430		$104,710
Materials inventory, December 31	(a)		118,320
Materials purchased	194,130		235,600
Cost of direct materials used in production	204,830		(a)
Direct labor	288,140		(b)
Factory overhead	89,420		117,280
Total manufacturing costs incurred during December	(b)		677,470
Total manufacturing costs	729,140		929,820
Work in process inventory, December 1	146,750		252,350
Work in process inventory, December 31	123,820		(c)
Cost of goods manufactured	(c)		671,190
Finished goods inventory, December 1	129,170		117,280
Finished goods inventory, December 31	135,280		(d)
Sales	1,126,580		1,047,100
Cost of goods sold	(d)		677,470
Gross profit	(e)		(e)
Operating expenses	146,750		(f)
Net income	(f)		232,460

Required:

Hint(s)

1. Determine the amounts of the missing items, identifying them by letter. Enter all amounts as positive numbers.

Letter	Grant Company	McClellan Company
a.	$	$
b.	$	$
c.	$	$
d.	$	$
e.	$	$
f.	$	$

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1.

a. The cost of direct materials used in production includes the beginning materials inventory plus purchases, less the ending materials inventory.

b. Total manufacturing costs incurred during December include direct materials, direct labor, and factory overhead.

c. The cost of goods manufactured is beginning work in process plus total manufacturing costs less the ending work in process.

d. The cost of goods sold is the beginning finished goods plus the cost of goods manufactured, less the ending finished goods.

e. Sales minus cost of goods sold equals gross profit.

f. Gross profit minus operating expenses equals net income.

Use similar relationships from Grant to find the missing amounts for the McClellan items (a) through (f).

Learning Objective 2, Learning Objective 3.

Hint(s)

Hide 2. Prepare McClellan Company’s statement of cost of goods manufactured for December. Enter all amounts as positive numbers. McClellan Company Statement of Cost of Goods Manufactured For the Month Ended December 31, 2014 $ Direct materials: $ $ $ Total manufacturing costs incurred during December Total manufacturing costs $ $

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Incorrect

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2. The cost of goods manufactured is the beginning work in process plus the cost of direct materials used in production plus direct labor and factory overhead, less the ending work in process.

Learning Objective 2, Learning Objective 3.

Hide 3. Prepare McClellan Company’s income statement for December. McClellan Company Income Statement For the Month Ended December 31, 2014 $ Cost of goods sold: $ $ $ $