# The administrative offices and manufacturing plant of Oakdale Tool & Disc share the same building. The follow

The administrative offices and manufacturing plant of Oakdale Tool & Disc share the same building. The following information (in) appears in the accounting records for last year: Required Prepare an income statement with a supporting cost of goods sold statement. Sell Block prepares three types of simple tax returns: individual, partnerships, and (small) corporations. The tax returns have the following characteristics: The total fixed costs per year for the company are \$3, 690,000. Required a. What is the anticipated level of profits for the expected sales volumes? b. Assuming that the product mix is the same at the break-even point, compute the break-even point. c. Suppose the product sales mix changes so that, for every ten tax returns prepared, six are for individuals, one is for a partnership, and three are for corporations. Now what is the break-even volume for Sell Block?

To calculate the income statement of Oakdale tools and dies .

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The income statement shows the revenue earned and expenses earned for a period. If revenue is more than expenses than the income statement will show net operating profit and if expenses are more than income it will show net operating loss

To following steps are followed to arrive at income statement

Step 1 – first calculate the cost of goods manufactured. The formula is given below

Cost of goods manufactured = Direct material expenses used in production + direct labor expenses+ manufacturing overheads + ( Opening Work in progress – Closing work in progress )

In manufacturing overheads the expenses related to factory are only taken

The statement of cost of goods manufactured is calculated below

 Oakdale tools and dies Schedule of Cost of Goods Manufactured( 1 Jan to 31 december) Direct materials: Amount(in \$000) Raw materials inventory, beginning 36 Add: Purchases of raw materials 10,950 Raw materials available for use 10,986 Deduct: Raw materials inventory, ending 42 Raw materials used in production \$10,944 Direct labor 2,520 Manufacturing overhead: Indirect factory labor 2,736 Factory supervision 1,470 Indirect materials and supplies 2,055 Building utilities (90%) 3,375 Building & machine depreciation (75%) 2,025 Property taxes—factory (80%) 2,016 Total overhead costs 13,677 Total manufacturing costs 27,141 Add: Work in process, beginning 96 27,237 Deduct: Work in process, ending 87 Cost of goods manufactured \$27,150

Second step is to calculated cost of goods sold . the formula is given below

Cost of goods sold = Opening finished goods inventory + cost of goods manufactured – closing finished goods inventory

The calculation of cost of goods sold is given below

 Oakdale tools and dies Schedule of Cost of Goods sold( 1 Jan to 31 december) Finished goods inventory, beginning 162 Add: Cost of goods manufactured 27,150 Goods available for sale 27,312 Deduct: Finished goods inventory, ending 195 Cost of goods sold 27,117

The final step is to calculate the income statement which is only possible if cost of goods sold amount is calculated and the income statement is calculated below

 Oakdale tools and dies Income statement( 1 Jan to 31 december) Sales 38190 less – Cost of goods sold 27,117 Gross Margin \$11,073 Less -Selling and administrative expenses marketing cost 2613 administrative expense 4800 7413 Net operating income \$3,660

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