Foremost Enterprises has provided you with the following scant information for the year 2004: Sales totaled shs100,000 during 2004. The beginning inventories for the year were: work in progress shs12,000, Finished goods shs 6,000 The company does not carry inventories of raw materials. Materials are purchased as needed for production. Direct labor is equal to25% of conversion cost. The work in progress inventory decreased by shs 2,000 during 2004. Gross margin during 2004 was equal to 55% of sales. Manufacturing overhead totaled shs 24,000 for 2004. Direct labor is equal to 40% of prime cost. Administration expenses for 2004 were twice as great as net income but only 25% of selling expenses. Required : Prepare the following cost statements for the year, in good form: a) Production cost statement b) Profit statement
Foremost Enterprises has provided you with the following scant information for the year 2004: Sales totaled shs100,000 during 2004. The beginning inventories for the year were: work in progress shs12,000,
Finished goods shs 6,000
The company does not carry inventories of raw materials. Materials are
purchased as needed for production. Direct labor is equal to25% of conversion cost. The work in progress inventory decreased by shs 2,000 during 2004. Gross margin during 2004 was equal to 55% of sales. Manufacturing overhead totaled shs 24,000 for 2004. Direct labor is equal to 40% of prime cost. Administration expenses for 2004 were twice as great as net income but only
25% of selling expenses.
Required : Prepare the following cost statements for the year, in good form:
a) Production cost statement
b) Profit statement
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