Search.Dean.P1.16A Template

Search.Dean.P1.16A Template - 350,000 Deduct: Finished...

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Dean Search Swift Company Schedule of Cost of Goods Manufactured For the Month Ended August 31 Direct materials: Raw materials inventory, August 1  8,000 Add: Purchases of raw materials  165,000 Raw materials available for use  173,000 Deduct: Raw materials inventory, August 31  13,000 Raw materials used in production  $160,000  Direct labor  70,000 Manufacturing overhead  85,000 Total manufacturing costs  315,000 Add: Work in process inventory, August 1  16,000 331,000 Deduct: Work in process inventory, August 31  21,000 Cost of goods manufactured  $310,000  Swift Company Income Statement For the Month Ended August 31 Sales  $450,000  Cost of goods sold: Finished goods inventory, August 1  40,000 Add: Cost of goods manufactured  310,000 Goods available for sale 
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Unformatted text preview: 350,000 Deduct: Finished goods inventory, August 31 60,000 Gross margin 290,000 Selling and administrative expenses 142,000 432,000 Net operating income $18,000 3.) Although the company's net operating income was understated by $30,000 (Net loss of 12,000 to Net gain of 18,000), I would still recommend that the company search for a buyer. This is because the company has not been performing in its last five months. Since the company's controller resigned last month and the new controller (Sam) has very little experience, I do not see a bright future for the company. Sam just illustarted that he was incapable of preparing an accurate income statement and therefore the company should search for a buyer....
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