Question

Given the following selected account balances of Delray Mfg., prepare its schedule of cost of goods manufactured for the year ended December 31, 2017. Include a listing of the individual overhead account balances in this schedule.

Sales . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . \(1,250,000

Raw materials inventory, Dec. 31, 2016 . . . . . . . . . 37,000

Work in process inventory, Dec. 31, 2016 . . . . . . . 53,900

Finished goods inventory, Dec. 31, 2016 . . . . . . . . 62,750

Raw materials purchases . . . . . . . . . . . . . . . . . . . . . 175,600

Direct labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 225,000

Factory computer supplies used . . . . . . . . . . . . . . . 17,840

Indirect labor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 47,000

Repairs—Factory equipment . . . . . . . . . . . . . . . . . \) 5,250

Rent cost of factory building . . . . . . . . . . . . . . . . . 57,000

Advertising expense . . . . . . . . . . . . . . . . . . . . . . . 94,000

General and administrative expenses . . . . . . . . . 129,300

Raw materials inventory, Dec. 31, 2017 . . . . . . . 42,700

Work in process inventory, Dec. 31, 2017 . . . . . . 41,500

Finished goods inventory, Dec. 31, 2017 . . . . . . . 67,300

Short answer

The cost of goods manufactured is computed as $53,390and operating income is computed as $496,860

Step-by-step solution

Preparation of schedule of cost of goods manufactured (1)

Schedule of cost of goods manufactured
	Amount ($)	Amount ($)
Direct Materials
Raw materials Inventory, Dec 31, 2016	37,000
Add: Raw Materials Purchases	175,600
Raw Materials available for use	212,600
Less: Raw materials inventory, Dec 31, 2017	42,700
Direct Materials Used		169,900
Direct Labor		225,000
Factory Overhead:
Factory computer supplies used	17,840
Indirect labor	47,000
Repairs factory equipment	5,250
Rent Cost of factory building	57,000
Total factory overhead costs		127,090
Total manufacturing costs		521,990
Add: Work in process Inventory, Dec 31, 2016		53,900
Total cost of work in process		575,890
Less: Work in Process Inventory, Dec 31, 2017		41,500
Cost of goods manufactured		534,390

Computation of cost of goods sold (2)

Delray MGG.
Income Statement
For the year ended December 31, 2017
	Amount ($)	Amount ($)
Sales		1,250,000
Cost of goods sold
Finished goods inventory, Dec 31, 2016	62,750
Add: Cost of goods manufactured	534,390
Cost of goods available for sale	597,140
Less: Finished goods Inventory Dec 31, 2017	67,300
Cost of goods sold		529,840
Gross Profit		720.160
Operating expenses
Advertising expenses	94,000
General and administrative	129,300
Total Operating expenses		223,300
Operating Income		496,860