Task: Cost of goods manufactured, cost of goods sold, and income statement. Miller & Co. incurred the following costs during June:
Raw materials purchased $66,150
Direct Labor ($15 per hour) $82,500
Manufacturing Overhead (Actual) $135,450
Selling Expenses $44,700
Administrative Expenses $22,050
Interest Expense $7,660
Manufacturing overhead is applied on the basis of $25 per direct labor hour. Assume that over-applied or under-applied overhead is transferred to cost of goods sold only at the end of the year. During the month, 5,000 units of product were manufactured and 5,300 units of product were sold. On June1 and June 30, Miller & Co. carried the following inventory balances:
June 1 June 30
Raw Materials $27,440 $25,060
Work In Process $74,480 $79,760
Finished Goods $58,520 $41,525
Required:
1) Prepare a statement of cost of goods manufactured for the month of June and calculate the average cost per unit of product manufactured,
2) Calculate the cost of goods sold during June.
3) Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the financial statements?
4) Prepare a traditional (absorption) income statement for Miller & Co. for the month of June. Assume that sales for the month were $413,400 and the company's effective income tax rate was 40%.