A list of account balances for Nicholas Corporation follow R

A list of account balances for Nicholas Corporation follow: Revenue and Expenses January 1 inventories Purchases of raw materials $140,000 Raw materials $45,000 Direct labor $225,000 Work in process $30,000 Indirect labor $40,000 Finished Goods $105,000 Rent - factory $84,000 Depreciation - machinery $35,000 Insurance - factory $18,000 December 31 inventories Salesperson\'s salaries $72,000 Raw materials $40,000 Maintenance - machinery $12,000 Work in process $35,000 Administrative salaries $50,000 Finished goods $110,000 Miscellaneous - factory $26,000 Miscellaneous - office $40,000 Sales revenues $850,000 what is Nicholas Corporations\'s Net Income?

Solution

Schedule for manufacturing cost beginning raw material 45000 Add Purchase of raw material 140000 Total 185000 Less Ending Raw material 40000 Raw material used in production 145000 Direct labor 225000 Manufacturing overheads Indirect labor cost 40000 Rent factory 84000 Depreciation machinery 35000 insurance factory 18000 Maintenance machinery 12000 Misc. Factory 26000 Manufacturing overheads 215000 Total manufacturing cost 585000 Add Beginning work in progress 30000 615000 less Ending work in progress 35000 Cost of goods manufactured 580000 Income statement Sales 850000 Cost of goods sold Cost of goods manufactured 580000 Add Beginning finished goods inventory 105000 Cost of goods available for sale 685000 Less Ending finished goods inventory 110000 Cost of goods sold 575000 Gross profit 275000 less Operating expense Administrative expense Admin salaries 50000 Misc. Office 40000 Total adminstrative expense 90000 Selling expense Sales person salaries 72000 Total selling expense 72000 Total operating expense 162000 Net income 113000