Umair Company is a manufacturing of computers. Its controller resigned in October 2019. An inexperienced assistant accountant has prepared the following income statement for the month of October 2019.   UMAIR COMPANY       Income statement       For the Month Ended October 31,2019   Sales (net)       $390,00 Less: Operating expenses         Raw materials purchases $ 132,000     Direct labor cost   95,000     Advertising expense 45,000     Selling and administrative salaries 37,500     Rent on factory facilities 30,000     Depreciation on sales equipment 22,500     Depreciation on factory equipment 15,500     Indirect labor cost 14,000     Utilities expense   6,000     insurance expense   4,000 401,500 Net loss       -$11,500 Prior to October 2019 the company had been profitable every month. The company’s president is concerned about the accuracy of the income statement. As his friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows.                                                 October 1 October 31 Raw materials $ 9,000 $17,000 Work in process 8,000 7,000 finished goods 15,000 24,000 Inventory balance at the beginning and end of October were:     Only 30% of the utilities and 70% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities. Instructions:                                                                                                   Prepare a schedule of the cost of goods manufactured for the October 2019.

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Umair Company is a manufacturing of computers. Its controller resigned in October 2019. An inexperienced assistant accountant has prepared the following income statement for the month of October 2019.

 

UMAIR COMPANY

 

 

 

Income statement

 

 

 

For the Month Ended October 31,2019

 

Sales (net)

 

 

 

$390,00

Less: Operating expenses

 

 

 

 

Raw materials purchases

$ 132,000

 

 

Direct labor cost

 

95,000

 

 

Advertising expense

45,000

 

 

Selling and administrative salaries

37,500

 

 

Rent on factory facilities

30,000

 

 

Depreciation on sales equipment

22,500

 

 

Depreciation on factory equipment

15,500

 

 

Indirect labor cost

14,000

 

 

Utilities expense

 

6,000

 

 

insurance expense

 

4,000

401,500

Net loss

 

 

 

-$11,500

Prior to October 2019 the company had been profitable every month. The company’s president is concerned about the accuracy of the income statement. As his friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows.                                              

 

October 1

October 31

Raw materials

$ 9,000

$17,000

Work in process

8,000

7,000

finished goods

15,000

24,000

  1. Inventory balance at the beginning and end of October were:

 

 

  1. Only 30% of the utilities and 70% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities.

Instructions:                                                                                                  

Prepare a schedule of the cost of goods manufactured for the October 2019.

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