Accounting: What the Numbers Mean 11th Edition by Wayne McManus,Daniel Viele,David Marshall

Exercise 12

Cost of goods manufactured, cost of goods sold, and income statement GrandSlam, Inc., incurred the following costs during March:

Required:
During the month, 2,600 units of product were manufactured and 1,450 units of product were sold. On March 1, GrandSlam, Inc., carried no inventories. On March 31, there were no inventories for raw materials or work in process.
a. Calculate the cost of goods manufactured during March and the average cost per unit of product manufactured.
b. Calculate the cost of goods sold during March.
c. Calculate the difference between cost of goods manufactured and cost of goods sold. How will this amount be reported in the financial statements?
d. (Optional) Prepare a traditional (absorption) income statement for GrandSlam, Inc., for the month of March. Assume that sales for the month were $138,040 and the company's effective income tax rate was 35%.