Prepare a schedule of cost of goods manufactured for october

Assignment Help Cost Accounting
Reference no: EM131105818

Phillips Company is a manufacturer of computers. Its controller resigned in October 2014. An inexperienced assistant accountant has prepared the following income statement for the month of October 2014.

Income Statement
For the Month Ended October 31, 2014

Sales (net)


Less: Operating expenses

Raw materials purchases


Direct labor cost


Advertising expense


Selling and administrative salaries


Rent on factory facilities


Depreciation on sales equipment


Depreciation on factory equipment


Indirect labor cost


Utilities expense


Insurance expense



Net loss


Prior to October 2014, the company had been profitable every month. The company's president is concerned about the accuracy of the income statement. As her friend, you have been asked to review the income statement and make necessary corrections. After examining other manufacturing cost data, you have acquired additional information as follows.

1. Inventory balances at the beginning and end of October were:


October 1

October 31

Raw materials



Work in process



Finished goods



2. Only 75% of the utilities expense and 60% of the insurance expense apply to factory operations. The remaining amounts should be charged to selling and administrative activities.


(a) Prepare a schedule of cost of goods manufactured for October 2014.

(b) Prepare a correct income statement for October 2014.

Reference no: EM131105818

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