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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.
Cornerstones of Cost Management (C...
Solutions
Cornerstones of Cost Management (C...
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 $10.50 per unit.
Required:
- 1. Prepare a statement of cost of goods manufactured.
- 2. Prepare an absorption-costing income statement.
1.
Prepare a statement of cost of goods manufactured.
Explanation of Solution
Cost of goods manufactured: Cost of goods manufactured refers to the costs incurred for manufacturing the goods during the period. A statement of cost of goods manufactured is prepared in order to determine the cost of goods manufactured, which in turn is used to determine the cost of goods sold, and prepare the income statement.
Prepare a statement of cost of goods manufactured.
| O Company | ||
| Statement of Cost of Goods Manufactured | ||
| For Last Year | ||
| Particulars | Amount ($) | Amount ($) |
| Direct materials: | ||
| Beginning inventory | 3,450 | |
| Add: Purchases | 183,750 | |
| Less: Ending inventory | (2,700) | |
2.
Prepare an absorption-costing income statement.
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