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

o T-Mobile令 8:40 PM moodle-2017-2018.fullerton.edu Lo.2 2-8. Prepare Statements forManufactaring Company The administrative ofices and mamufacturing plant of Oakdale Tool & Die share the same build- ing. The following informatian (in 5000s) appears in the nccounting records for last year Administrative costs Bulding and machine depreclatiorn 4,800 2,700 3,750 (75% of this amount for factory) . Building uditios (90% of this amount is for factory Direct labor Direct materlals inventory, December 31. Direct materials Inventory, January 1. Factory supervisian Finished goods Inventory, December 31 Finished goods Inventory, January 1. Indirect factory labor. indirect materisi, and supples. Markating co 36 10,950 1,470 195 162 2,736 2,055 .. Property taxes an building (80% of this amourt Istr factory Sales ravenue Work-n-process Inventory, December 31 2520 67 Required Prepare an ineome statement with a supporting cost of goods sold statement. 3-50. Estemulans of the CVP Mode. Multiple Products L.O.4 Sell Block prepares three types of simple tax retuns: individual partnerships, and (small) corpors- tions. The tax returns have the following characteristics Individuals Partnerships Corporations Price charged per tax retun..........$0 Varlable coat per tax returm (including $1,000 $2,000 wage paid to tax preparer) Expected tax returns prepared per year $180 60,000 S900 4,000 $1,800 16,000 The total fixed costs per year for the company are $3,690,000, d What is the anticipated level of protts for the expected sales volumes? h Assuming that the product mix is the same at the break-even point, eompute the brenk-even point 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?

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?

Expert Answer

 

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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