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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 May: Instructions 1. For both companies, determine the amounts of the missing items (a) through (f), identifying them by letter. 2. Prepare Yakima Company’s statement of cost of goods manufactured for May. 3. Prepare Yakima Company’s income statement for May.

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Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020

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BuyFindarrow_forward

Managerial Accounting

15th Edition
Carl Warren + 1 other
Publisher: South-Western College Pub
ISBN: 9781337912020
Chapter 1, Problem 4PA
Textbook Problem
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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 May:

Chapter 1, Problem 4PA, Manufacturing income statement, statement of cost of goods manufactured Several items are omitted

Instructions

  1. 1. For both companies, determine the amounts of the missing items (a) through (f), identifying them by letter.
  2. 2. Prepare Yakima Company’s statement of cost of goods manufactured for May.
  3. 3. Prepare Yakima Company’s income statement for May.

1.

To determine

Ascertain the amounts of the missing items, identifying them by letter.

Explanation of Solution

Cost of goods manufactured: Cost of goods manufactured refers to the costs incurred for manufacturing the goods during the period. A statement of cost of goods manufactured is prepared in order to determine the cost of goods manufactured, which in turn is used to determine the cost of goods sold, and prepare the income statement.

Income statement: The income statement is a financial statement that shows the net income earned or net loss suffered by a company through reporting all the revenues earned, and expenses incurred by the company over a specific period of time. An income statement is also known as an operation statement, an earning statement, a revenue statement, or a profit and loss statement. The net income is the excess of revenue over expenses.

Working notes:

  1. 1.      Determine the amount (a) in Company R.

  Materials inventory, May 31[Materials inventory, May 1+MaterialspurchasedCost of directmaterials used in production ]=$100,000+$950,000$938,500=$111,500 (a)

  1. 2.      Determine the amount (a) in Company Y.

    (Cost of direct materialsused in production)(Materials inventory, May 1+MaterialspurchasedMaterials inventory, May 31)=$48,200+$710,000$50,000=$708,200 (a)

  2. 3.      Determine the amount (b) in Company Y.

  Direct labor=(Total manufacturing costs incurred during MayCost of mterials used in productionFactory overhead)=$2,484,200$708,200$446,000=$1,330,000 (b)

  1. 4.      Determine the amount (b) in Company R.

    (Total manufacturing costsincurred during May)(Cost of direct materials used in production+Direct labor+Factory overhead)=($938,500+$2,860,000+$1,800,000)=$5,598,500 (b)

  2. 5.      Determine the amount (c) in Company Y.

    Work in progress, May 31[Total manufacturing costsCost of goods manufactured]=$2,660,600$2,491,500=$169,100 (c)

  3. 6.      Determine the amount (c) in Company R.

  Cost of goods manufactured[Total manufacturing costs+Work in process, May1Work in progress May 31]=[$5,598,500+$400,000$382,000]=$5,616,500 (c)

  1. 7

2.

To determine

Prepare Company Y’s statement of cost of goods manufactured for May.

3.

To determine

Prepare Company Y’s income statement for May.

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Chapter 1 Solutions

Managerial Accounting
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