The following information is available for Robstown Corporation for 20Y8:

Inventories January 1 December 31
Materials $352,000 $436,200
Work in process 632,000 590,800
Finished goods 606,200 574,000

December 31
Advertising expense $295,400
Depreciation expense-office equipment 43,800
Depreciation expense-factory equipment 56,340
Direct labor 669,400
Heat, light, and power-factory 22,220
Indirect labor 77,000
Materials purchased 659,200
Office salaries expense 185,300
Property taxes-factory 18,500
Property taxes-office building 31,600
Rent expense-factory 33,000
Sales 3,015,000
Sales salaries expense 418,000
Supplies-factory 15,200
Miscellaneous costs-factory 9,700

Required:
a. Prepare the 20Y8 statement of cost of goods manufactured.
b. Prepare the 20Y8 income statement.

1. Cost of goods manufactured = $1,672,160

2. Net income =  $336,540

Explanation:

Requirement 1

        Robstown Corporation

statement of cost of goods manufactured

       For the year ended 20Y8

Direct Materials

Beginning materials inventory              $352,000

Add: Materials purchased                     $659,200

Materials available for use =                   1,011,200

Less: Ending materials inventory =       ($436,200)

Direct materials used =                           575,000

Direct labor =                                            669,400

Prime cost =                                                                 1,244,400

Add: Factory overhead

Depreciation expense-factory equipment $56,340

Heat, light, and power-factory                       22,220

Indirect labor                                                   77,000

Property taxes-factory                                     18,500

Rent expense-factory                                      33,000

Supplies-factory                                               15,200

Miscellaneous costs-factory                            9,700

Total factory overhead =                                                231,960

Manufacturing cost =                                               $1,476,360

Add: Work in process, January 1 =                             $632,000

Less: Work in process, December 31 =                     ($436,200)

Cost of goods manufactured =                                  $1,672,160

Requirement 2

       Robstown Corporation

           Income statement

       For the year ended 20Y8

Sales                                                          3,015,000

Less: Cost of goods sold (Note - 1)          ($1,704,360)

Gross profit =                                                                     $1,310,640

Less: Administrative and selling expense

Advertising expense                                         $295,400

Depreciation expense-office equipment           43,800

Office salaries expense                                       185,300

Property taxes-office building                             31,600

Sales salaries expense                                        418,000

Total cost                                                                               $974,100

Net income =                                                                         $336,540

(Note - 1) Cost of goods manufactured + Beginning finished goods - Ending finished goods = $1,672,160 + 606,200 - 574,000 = $1,704,360.

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