Illustration 2 (on chapter two)
1. Chambers manufacturing Firm incurred the following costs during 20x6.
Champers completed 35,000 units during the year. All materials used were classified as direct
materials.
Beginning Raw Materials Inventory Br. 25,000
Beginning work-in-process Inventory 30,000
Beginning Finished Goods Inventory 32,000
Ending Raw Materials Inventory 24,000
Ending work-in-process Inventory 28,000
Ending g Finished Goods Inventory 34,000
Raw Materials Purchased 250,000
Assembly line labor costs 175,000
Factory supplies used 4,500
Depreciation on factory 22,000
Depreciation on production machinery 35,000
Depreciation on sales office 13,000
Depreciation administrative equipment 9, 0000
Sales 875,000
Sales salaries 78,000
Factory supervision 65,000
Factory guard cost 33.000
Office security 28,000
Instructions: Based on the information above, compute
a. the cost of material used during 20x6
b. the overhead cost incurred during 20x6
c. the manufacturing cost for the year 20x6
d. the cost of goods manufactured during this period
e. the Cost of goods sold for the current year
f. the gross profit for chambers
g. the net income for this period
2. XYZ Company is a metal- and woodcutting manufacturer, selling products to the home
construction market. Consider the following data for 2011:
h. Problem for Self-Study
Sandpaper Br. 2,000
Materials-handling costs 70,000
Lubricants and coolants 5,000
Miscellaneous indirect manufacturing labor 40,000
Direct manufacturing labor 300,000
Direct materials inventory Jan. 1, 2011 40,000
Direct materials inventory Dec. 31, 2011 50,000
Finished goods inventory Jan. 1, 2011 100,000
Finished goods inventory Dec. 31, 2011 150,000
Work-in-process inventory Jan. 1, 2011 10,000
Work-in-process inventory Dec. 31, 2011 14,000
Plant-leasing costs 54,000
Depreciation—plant equipment 36,000
Property taxes on plant equipment 4,000
Fire insurance on plant equipment 3,000
Direct materials purchased 460,000
Revenues 1,360,000
Marketing promotions 60,000
Marketing salaries 100,000
Distribution costs 70,000
Customer-service costs 100,000
Required: prepare income statement for the year ended Dec. 31, 2011
