QUESTION #1
Gumble Corporation had income from continuing operations of $300,000 for the year ended December 31, 2008. It also had the following items (before income taxes):
1. Extraordinary flood loss of $150,000.
2. Loss of $60,000 on discontinuance of a division.
All items are subject to income taxes at a 30% tax rate.
Instructions
Prepare a partial income statement, beginning with income from continuing operations.
QUESTION #2
Presented below is a list of costs and expenses incurred in the factory by Nu-Way Corporation, a manufacturer of recreational vehicles.
____ 1. Property taxes on the factory land
____ 2. Nails and glue used in production
____ 3. Cabinet maker's wages
____ 4. Factory supervisors salaries
____ 5. Metal used in manufacturing
____ 6. Depreciation on factory machines
____ 7. Factory utilities
____ 8. Carpeting for the recreational vehicles
____ 9. Property taxes on the factory building
____ 10. Insurance on factory equipment
Instructions
Classify the above items into the following categories:
DM Direct Materials
DL Direct Labor
MO Manufacturing Overhead