Managerial Accounting Assignment Example | Topics and Well Written Essays - 1000 words

Managerial Accounting - Assignment Example he preparation of the Income statement were the exclusion of the previous costs regarding the raw material, work in process and finished goods which were in the opening stock of the company at the start of the year. Let’s start with the cost of goods manufactured statement. While preparation of the cost of goods manufactured statement, the opening stock of the raw material should be added to the current year purchases as it forms a part of the material that will be used during the year. However, the ending raw material should be subtracted because it the amount of inventory which was not used in the production process. This gives the raw material used. (Accounting for Management n.d.) The labour cost that was directly incurred with the raw material should be added to the raw material used cost along with all the expenses which were incurred in connection with the transformation of the raw material into work in process or finished goods. Rather than subtracting all the expenses directly from the sales, expenses should be bifurcated in proportion to the expenses incurred in connection with the factory such as the depreciation of the factory, insurance concerned with factory and the utilities paid for the factory building which were $31,000, $8,400 and $4800 respectively should form a part of the cost of goods manufactured statement. The work in process opening cost should be added to the cost of manufacturing and the ending work in process should be subtracted i.e. $14,000 and $16,000 respectively. After adding all the costs, the cost of goods manufactured stood at $572,200. The cost of goods manufactured obtained from the statement should be added to the opening finished goods stock which was ignored and the ending stock of finished goods should be subtracted from it which will produce the gross profit of the company that was $225,800. (Investopedia) The expenses of the company which were solely incurred with the selling and admin such as the 30% and 40%