Algoma Corporation manufactures toy train cars Sherwood the

Algoma Corporation manufactures toy train cars. Sherwood, the CFO of the company, is preparing the financial statements for fiscal year-end 2015. The accounting records are as follows: Raw materials inventory was $83,000 as of December 31, 2014 and $53,000 as of December 31, 2015. Work-in-process inventory was $206,000 as of December 31, 2014 and $287,000 as of December 31, 2015. Finished goods inventory was $187,000 as of December 31, 2014 and $65,000 as of December 31, 2015. Analyze the data for FY 2015 and answer the questions that follow: Factory maintenance expense $41,700. Plant manager salary $30,000. Maintenance on office building $40,000. Advertising expense $80,000. Sales revenue $1,965,000. Direct labor wages expense $200,000. Raw materials purchases $540,000. Rent on office building $150,000. Supplies for factory $20,000. 1. What is the amount of the company\'s direct materials used for the year ended December 31, 2015? . What is the company\'s cost of goods manufactured for the year ended December 31, 2015? ( 3. What is the company\'s cost of goods sold for the year ended December 31, 2015? 4. What is the company\'s gross margin percentage for the year ended December 31, 2015? State with two decimal places; e.g., .3754 would be entered as 37.54 5. What if there was an error in counting raw materials ending inventory and the correct amount as of December 31, 2015 should have been $57,000. If the error is not corrected, what is the amount by which net operating income is over- or under-stated? Enter an overstatement as a negative number and an understatement as a positive number.

Solution

Q.1 Direct material used for the year ended Dec31 2015 (Raw mat.inv.at the end dec31.2014-Raw Mat.Inv at the end dec31 2015+ Raw metarial, $83000-$53000+ $540,000+ $570,000)

2.Company\'s cost of goods manufactured for the year ended Dec31,2015

Total Fixed cost + Veriable cost ( $41700+$30,00+$ 40,000+ $200,000+$540,000+$150.000=$ 1001700)

3. Company\'s cost of goods sold for the year ended Dec31,2015 ( total Production cost + Selling cost = $ 1001700+$ 80,000= $1081700 )

4.