PROBLEM 2-43 (35 MINUTES)

1.

LAREDO LUGGAGE COMPANY

SCHEDULE OF COST OF GOODS MANUFACTURED
FOR THE YEAR ENDED DECEMBER 31, 20X2
Direct material:
Raw-material inventory, January 1............................................
Add: Purchases of raw material................................................
Raw material available for use...................................................
Deduct: Raw-material inventory, December 31........................
Raw material used......................................................................
Direct labor......................................................................................
Manufacturing overhead:
Indirect material..........................................................................
Indirect labor...............................................................................
Utilities: plant..............................................................................
Depreciation: plant and equipment...........................................
Other............................................................................................
Total manufacturing overhead...................................................
Total manufacturing costs.............................................................
Add: Work-in-process inventory, January 1.................................
Subtotal...........................................................................................
Deduct: Work-in-process inventory, December 31......................
Cost of goods manufactured.........................................................

2.

$ 20,000
90,000
$110,000
12,500

$ 5,000
7,500
20,000
30,000
40,000

$97,500
100,000

102,500
$300,000
20,000
$320,000
15,000
$305,000

LAREDO LUGGAGE COMPANY

SCHEDULE OF COST OF GOODS SOLD
FOR THE YEAR ENDED DECEMBER 31, 20X2
Finished goods inventory, January 1............................................................
Add: Cost of goods manufactured................................................................
Cost of goods available for sale....................................................................
Deduct: Finished-goods inventory, December 31........................................
Cost of goods sold..........................................................................................

$ 10,000
305,000
$315,000
25,000
$290,000

PROBLEM 2-43 (CONTINUED)

3.

LAREDO LUGGAGE COMPANY

INCOME STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 20X2
Sales revenue..................................................................................................
Less: Cost of goods sold...............................................................................
Gross margin...................................................................................................
Selling and administrative expenses.............................................................
Income before taxes........................................................................................
Income tax expense........................................................................................
Net income.......................................................................................................

4.

$475,000
290,000
$185,000
75,000
$110,000
45,000
$65,000

In the electronic version of the solutions manual, press the CTRL key and click on
the following link: 10E - BUILD A SPREADSHEET 02-43.XLS

PROBLEM 2-44 (30 MINUTES)

1.

2.

Manufacturing overhead:
Indirect labor.
Building depreciation ($160,000 x 75%)..
Other factory costs..
Total...

$ 218,000
120,000
688,000
$1,026,000

Cost of goods manufactured:

Direct material:
Raw-material inventory, Jan. 1
Add: Purchases of raw material..
Raw material available for use.
Deduct: Raw-material inventory, Dec. 31.
Raw material used..
Direct labor..
Manufacturing overhead..
Total manufacturing costs..
Add: Work-in-process inventory, Jan. 1.
Subtotal..
Deduct: Work-in-process inventory, Dec. 31.
Cost of goods manufactured..

$ 31,600
350,000
$381,600
36,400
$ 345,200
508,000
1,026,000
$1,879,200
71,400
$1,950,600
124,200
$1,826,400

PROBLEM 2-50 (20 MINUTES)

1.

a, d, g, j

2.

b, c, f

3.

b, d, g, k

4.

b, c and d*, e and f and g*, k*

*The building is used for several purposes.

5.

b, c, f

6.

b, c, h

7.

b, c, f

8.

b, c, e

9.

b, c and d, e and f and g, k

The building heated by the furnace is used for several purposes.

10.

a, d, g, j

11.

a, d, g, i

12.

a, d, g, j

13.

b, c**, f
**The sign will be depreciated as a period cost.

14.

b, d, g, k

15.

a, d, g, k