San Fernando Fashions Company Schedule of Cost of Goods Manufactured For the year ended Dec 31, 20x2 (in thousands

) Direct Material : Raw Material inventory, Jan 1 Add : Purchase Raw Material Raw Material available for use Deduct : Raw Material inv, Dec 31 Raw Material used Direct Labor Manufacturing Overhead Indirect material Indirect labor Depr.on plant and equipment Utilities Other manufacturing overhead Total manufacturing overhead Total manufacturing cost Add : Work in process inventory, Jan 1 Sub total Deduct : Work in process inventory, Dec 31 Cost of goods manufactured 10,000 15,000 80,000 40,000 80,000 225,000 640,000 40,000 680,000 20,000 660,000 40,000 200,000 240,000 25,000 215,000 200,000

San Fernando Fashions Company Schedule of Cost of Goods Sold For the year ended Dec 31, 20x2 (in thousands) Finished goods inventory, Jan 1 Add : Cost if goods manufactured Cost of goods available for sale Finished goods inventory, Dec 31 Cost of goods sold San Fernando Fashions Company Income Statement For the year ended Dec 31, 20x2 (in thousands) Sales Revenue 980,000 20,000 660,000 680,000 50,000 630,000

Less : Cost of goods sold Gross Margin Selling and admin expenses Income before taxes Income tax expense Net Income 630.on plant and equipment Utilities Other manufacturing overhead Total manufacturing overhead Total manufacturing cost Add : Work in process inventory.000 655. Calculation can be seen as follows : San Fernando Fashions Company Schedule of Cost of Goods Manufactured For the year ended Dec 31.000 90.000 190.000 25. Dec 31 Raw Material used Direct Labor Manufacturing Overhead Indirect material Indirect labor Depr.000 230.000 660000 San Fernando Fashions Company .000 205. and it would make San Fernando's net income increase $5000.000 230.000 350. Dec 31 Cost of goods manufactured 10.000 150. so the cost of goods sold calculation would decreased to.000 200.000 200.000 20.000 110. it would decreased cost of goods manufactured.000 20.000 If raw material purchases amounted $190000 and indirect labor was $20000.000 635.000 40. Jan 1 Sub total Deduct : Work in process inventory.000 40.000 675.000 80.000 40.000 80. 20x2 (in thousands) Direct Material : Raw Material inventory. Jan 1 Add : Purchase Raw Material Raw Material available for use Deduct : Raw Material inv.

10.000 150.000 655.6 2.8.15 .000 90.5.000 205.000 355.10.13.000 625.7.7.3.12 1.000 50.13 1.000 625.2. Jan 1 Add : Cost if goods manufactured Cost of goods available for sale Finished goods inventory.12 11.12 12 1 2.14.7 10.000 675.5.000 630000 110000 Cost Classification Variable Fixed Period Product Administrative Selling Manufacturing R&D Direct Material Direct Labor Manufacturing Overhead Cost item no : 1.3.3.000 20. 20x2 (in thousands) Sales Revenue Less : Cost of goods sold Gross Margin Selling and admin expenses Income before taxes Income tax expense Net Income 980.10.Schedule of Cost of Goods Sold For the year ended Dec 31.2.8.14 11.7. Dec 31 Cost of goods sold San Fernando Fashions Company Income Statement For the year ended Dec 31.14.12 9.000 115. 20x2 (in thousands) Finished goods inventory.

3.7.5.8.15 .12 11.14 11.12 12 648000 1 36000 2.12 r&d.3.7 10. admin 1.Cost Classification Variable Fixed Period Product Administrative Selling Manufacturing R&D Direct Material Direct Labor Manufacturing Overhead Cost item no : 1.13 1.10.2.12 18 9.14.7. selling.10.2.14.7.10.6 2.3.8.5.13.

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management should rely on formula from least square.Overhead rate from first calculation different compare to least square calculation because the first calculation determined using direct material data and estimate direct labor hour.Least square regression calculation determined by total overhead cost and total direct labour hours (regular and overtime) In my opinion. because I think it is quite accurate. .