Flow of Costs and Income Statement Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $959,850 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $2,239,650 advertising the product through these infomercials. In addition, the company incurred $960,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8. Ginocera uses a job order cost system to accumulate costs associated with the kitchen knife. The unit direct materials cost for the knife is as follows: Hardened steel blanks (used for knife shaft and blade) $2.00 Wood (for handle) 0.70 Packaging 0.70 The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 1,680 knives. After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.30 per unit. The knives are sold to stores. Each store is given promotional materials such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.3 per knife. Total completed production was 711,000 units during the year. Other information is as follows: Number of customers (stores) 30,200 Number of knives sold 604,400 Wholesale price (to store) per knife $18 Factory overhead cost is applied to jobs at the rate of $840 per stamping machine hour after the knife blanks are stamped. There were an additional 177,750 stamped knives, handles, and cases waiting to be assembled on December 31, 20Y8. In your computations, if required, round interim per unit costs to two decimal places. Required: 1. Prepare an annual income statement for the Kitchen Ninja knife series. Ginocera Inc. Income Statement For the Year Ended December 31, 20Y8 $fill in the blank d1a7b009bfd701a_2 fill in the blank d1a7b009bfd701a_4 $fill in the blank d1a7b009bfd701a_6 Selling expenses: $fill in the blank d1a7b009bfd701a_8 fill in the blank d1a7b009bfd701a_10 fill in the blank d1a7b009bfd701a_12 Total selling expenses $fill in the blank d1a7b009bfd701a_13 Administrative expenses: fill in the blank d1a7b009bfd701a_15 Total operating expenses fill in the blank d1a7b009bfd701a_16 Income from operations $fill in the blank d1a7b009bfd701a_17 2. Determine the balances in the work in process and finished goods inventories for the Kitchen Ninja knife series on December 31, 20Y8. Finished Goods $fill in the blank f5e1df002f80fe3_1 Work in Process $fill in the blank f5e1df002f80fe3_2
Flow of Costs and Income Statement
Ginocera Inc. is a designer, manufacturer, and distributor of low-cost, high-quality stainless steel kitchen knives. A new kitchen knife series called the Kitchen Ninja was released for production in early 20Y8. In January, the company spent $959,850 to develop a late-night advertising infomercial for the new product. During 20Y8, the company spent $2,239,650 advertising the product through these infomercials. In addition, the company incurred $960,000 in legal costs. The knives were ready for manufacture on January 1, 20Y8.
Ginocera uses a
| Hardened steel blanks (used for knife shaft and blade) | $2.00 |
| Wood (for handle) | 0.70 |
| Packaging | 0.70 |
The production process is straightforward. First, the hardened steel blanks, which are purchased directly from a raw material supplier, are stamped into a single piece of metal that includes both the blade and the shaft. The stamping machine requires one hour per 1,680 knives.
After the knife shafts are stamped, they are brought to an assembly area where an employee attaches the handle to the shaft and packs the knife in a decorative box. The direct labor cost is $0.30 per unit.
The knives are sold to stores. Each store is given promotional materials such as posters and aisle displays. Promotional materials cost $45 per store. In addition, shipping costs average $0.3 per knife.
Total completed production was 711,000 units during the year. Other information is as follows:
| Number of customers (stores) | 30,200 |
| Number of knives sold | 604,400 |
| Wholesale price (to store) per knife | $18 |
In your computations, if required, round interim per unit costs to two decimal places.
Required:
1. Prepare an annual income statement for the Kitchen Ninja knife series.
| Ginocera Inc. | |||
| Income Statement | |||
| For the Year Ended December 31, 20Y8 | |||
| $fill in the blank d1a7b009bfd701a_2 | |||
| fill in the blank d1a7b009bfd701a_4 | |||
| $fill in the blank d1a7b009bfd701a_6 | |||
| Selling expenses: | |||
| $fill in the blank d1a7b009bfd701a_8 | |||
| fill in the blank d1a7b009bfd701a_10 | |||
| fill in the blank d1a7b009bfd701a_12 | |||
| Total selling expenses | $fill in the blank d1a7b009bfd701a_13 | ||
| Administrative expenses: | |||
| fill in the blank d1a7b009bfd701a_15 | |||
| Total operating expenses | fill in the blank d1a7b009bfd701a_16 | ||
| Income from operations | $fill in the blank d1a7b009bfd701a_17 |
2. Determine the balances in the work in process and finished goods inventories for the Kitchen Ninja knife series on December 31, 20Y8.
| Finished Goods | $fill in the blank f5e1df002f80fe3_1 |
| Work in Process | $fill in the blank f5e1df002f80fe3_2 |
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