Answer:
a. $537,300
b. Aikman Company
Income Statement
For the year ended December 31, 2022
Sales Revenue $910,000
Less: Cost of goods sold
Raw material, beginning 21,000
Add:Purchases 150,000
Raw materials available 171,000
Less: Raw material, end 30,000
Cost of raw material used 141,000
Add: Direct labor 220,000
Prime Cost 361,000
Add: Factory overhead 180,000
Manufacturing cost 541,000
Add: Work in process, beginning 13,500
Less: Work in process, Ending 17,200
Cost of Goods Manufactured 537,300
Add: Finished Goods, beginning 27,000
Less: Finished Goods, Ending 21,000
Cost of Goods Sold 543,300
Gross Profit $366,700
c. Raw materials, ending $30,000
Work in process, ending $17,200
Finished goods, ending $21,000
Total inventory $68,200
d. The difference in the balance sheet and income statement of Aikman Company to Merchandising company is that, Aikman income statement consists of expenses arising from the manufacturing of goods that the merchandising company never incur. In addition to that, Aikman Company has ending inventory of Raw materials, work in process and finished goods while the other merchandising company only has ending inventory of good purchased not yet sold.
Explanation:
a. Aikman's statement of goods manufactured is presented below.
Aikman Company
Statement of Cost of Goods Manufactured
For the year ended December 31, 2022
Raw material, beginning 21,000
Add:Purchases 150,000
Raw materials available 171,000
Less: Raw material, end 30,000
Cost of raw material used 141,000
Add: Direct labor 220,000
Prime Cost 361,000
Add: Factory overhead 180,000
Manufacturing cost 541,000
Add: Work in process, beginning 13,500
Less: Work in process, Ending 17,200
Cost of Goods Manufactured 537,300
b. Income statement of Aikman starts from the sales revenue that the company incurs for the period and then deduct the cost of goods sold to arrive the gross profit.
c. Aikman's inventory balance consists of Raw materials, work in process and finished goods balances.
