Problem:
Cost of goods manufactured, cost of goods sold, and income statement. Champs, Inc., incurred the following costs during March:
Selling expenses $31,675
Direct lanor 56,628
Interest expense 8,213
Manufacturing overhead, actual 40,950
Raw Materials used 92,196
Administrative expenses 24,600
Requireed:
During the month 3,900 units of product were manufactured vand 2,200 units of product were sold. On March 1, Champs, Inc., carried no inventories. On March 31, there were no inventories for raw materials or work in process.
1) Calculate the cost goods manufactured during March and the average cost per unit of product manufactured.
2) Calculate the cost of goods sold during March.
3) Calculate the difference between cost of goods manfactured and cost of goods sold. How will this amount be reported in the financial statements?
4) Prepare a traditional (absorption) income statement for Champs, Inc., for the month of March. Assume that sales for the month were $207,060 and the company's effective income tax rate was 35%.