Income statement for the perioud ended 31 December 2014

Sales revenues 15,000,000

Less: Cost of sales -6,000,000
Period costs Gross profit 9,000,000
Less: Operating expenses
General and Administrating expenses -3,000,000
Selling and Markiting expenses -2,500,000
Operating Profit 3,500,000

Add: Other revenues and Gains 15,000

Less: Other expenses and loses -5,000
EBIT (Earnings Before Interest & Tax ) 3,510,000
Less: interest -170,000
EBT (Earning Before Tax) 3,340,000
Less: Tax -400,000
Net profit /Net Income 2,940,000

Statement of changses in equity for the year ended 31 December 2014

Beginning balance 3,000,000
Common stock 1,000,000
Preferred stock 3,500,000
Net profit for the year 2,940,000
Dividends -2,500,000
Ending balance 7,940,000
Product costs

Income from continuing operations

 Manufacturing costs

Direct Material (DM)

Dr. Cr.
Beg. Bal. 1,000,000.00
Purchases 2,000,000.00
DM used 1,500,000.00
Ending bal. 1,500,000.00
3,000,000.00 3,000,000.00

Direct Labour (DL)

Dr. Cr.

Expenses 4,000,000.00
WIP 4,000,000.00

4,000,000.00 4,000,000.00

Overhead
Dr. Cr.

Actual overhead 3,000,000.00 1)

Applied overhead 3,500,000.00

Over/under application 500,000.00 2)
3,500,000.00 3,500,000.00
3)

4)
5)
 WIP(work in progress)
Dr. Cr.
beg. Bal. 8,000,000
DM used 1,500,000
DL 4,000,000
Applied overhead 3,500,000
Cost of goods manufactured 8,000,000

Ending bal. 9,000,000

17,000,000 17,000,000

prime cost = DM used + DL

prime cost = 5,500,000.00

Conversion cost = DL+Overhead
Conversion cost = 7,500,000.00
Manufacturing costs = DM used + DL + Overhead
Manufacturing costs = 9,000,000
Total manufacturing costs = 17,000,000 (Manufacturing costs + beg. Balance WIP)
Cost of goods manufactured = (Total manufacturing costs + Ending bal. WIP)
8,000,000
 Finished Goods(FG)
Dr. Cr.
beg. Bal. 3,000,000
Cost of good manufactured 8,000,000
cost of good sold 4,000,000

Ending bal. 7,000,000

11,000,000 11,000,000

1)Cost of goods avalible for

sale = beg. Balance FG + cost of good manufactured
Cost of goods avalible for
sale = 11,000,000
cost of good sold = cost of goods avalible for sale - End. Bal. FG
cost of good sold = 4,000,000

Balance WIP)