Problem 1- Solution

Fortune Company
Statement of Cost of Goods Sold
For the Year Ended December, 31
Description Taka Taka
Direct Material:
Raw Material, January 01 80,000
Add: Purchase of Raw Material 700,000
Raw Material Available for Use 780,000
Less: Raw Material, December, 31 (60,000)
Direct Raw Material Used in Production 720,000
Direct Labor 280,000
Manufacturing Overhead:
Utilities – Factory 36,000
Depreciation – Factory 90,000
Insurance – Factory 40,000
Supplies – Factory 15,000
Indirect Labor 170,000
Maintenance – Factory 87,000
Total Manufacturing Overhead 438,000
Total Manufacturing Cost 1438,000
Add: Work in Process, January 01 170,000
Less: Work in Process, December 31 (95,000)
Cost of Goods manufactured 1513,000
Add: Finished Goods, January 01 250,000
Goods Available for Sale 1763,000
Less: Finished Goods, December 31 (200,000)
Cost of Goods Sold 15,63,000

Fortune Company
Income Statement
For the Year Ended December, 31
Description Taka Taka
Sales 2400,000
Less: Sales Return (60,000)
Net Sales 2340,000
Less: Cost of Goods Sold (1563,000)
Gross Profit 777,000
Less: Operating Expenses:
Depreciation Expense – Head Office (Tk 180,000 x 50%) 90,000
Other Administrative Expenses 270,000
Selling Expenses 140,000
Total Operating Expenses (500,000)
Net Operating Income 277,000