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Costs of Good Manufactured and Sold

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Gravois, Inc., incurred the following costs during June:

Selling expenses $ 158,375
Direct labor 283,140
Interest expense 41,065
Manufacturing overhead, actual 204,750
Raw materials used 460,980
Administrative expenses 123,000
________________________________________

During the month, 19,500 units of product were manufactured and 11,000 units of product were sold. On June 1, Gravois, Inc., carried no inventories. On June 30, there were no inventories for raw materials or work in process.

Requirement 1:
Calculate the cost of goods manufactured during June and the average cost per unit of product manufactured. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Cost of goods manufactured $
Average cost per unit $

Requirement 2:
Calculate the cost of goods sold during June. (Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)

Cost of goods sold $

Requirement 3:
(a) Calculate the difference between cost of goods manufactured and cost of goods sold. (Round your intermediate calculations to 2 decimal places. Input the amount as positive value. Omit the "$" sign in your response.)
Difference $

(b) How will this amount be reported in the financial statements?

The difference between cost of goods manufactured and cost of goods sold is in the account on the balance sheet.

Requirement 4:
Prepare a traditional (absorption) income statement for Gravois, Inc., for the month of June. Assume that sales for the month were $1,035,000 and the company's effective income tax rate was 35%. (Amounts to be deducted should be indicated with minus sign. Round your intermediate calculations to 2 decimal places. Omit the "$" sign in your response.)

Gravois, Inc.
Absorption Income Statement
For the month of June

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Solution Summary

This solution illustrates how to compute cost of goods manufactured and cost of goods sold, as well as how to use this information to prepare an absorption-basis income statement.

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