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Orman Company produces neon-colored covers for tablets (e.g., iPads). For last year, Orman reported the following: Last year, Orman produced 89,000 units and sold 90,500 units at $10.50 per unit. Required: 1. Prepare a statement of cost of goods manufactured. 2. Prepare an absorption-costing income statement.

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 2, Problem 35P
Textbook Problem
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Orman Company produces neon-colored covers for tablets (e.g., iPads). For last year, Orman reported the following:

Chapter 2, Problem 35P, Orman Company produces neon-colored covers for tablets (e.g., iPads). For last year, Orman reported

Last year, Orman produced 89,000 units and sold 90,500 units at $10.50 per unit.

Required:

  1. 1. Prepare a statement of cost of goods manufactured.
  2. 2. Prepare an absorption-costing income statement.

1.

To determine

Prepare a statement of cost of goods manufactured.

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.

Prepare a statement of cost of goods manufactured.

O Company
Statement of Cost of Goods Manufactured
For Last Year
ParticularsAmount ($)Amount ($)
Direct materials:  
Beginning inventory3,450 
Add: Purchases183,750 
Less: Ending inventory(2,700)

2.

To determine

Prepare an absorption-costing income statement.

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Chapter 2 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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