W. w. phillips company produced 4,000 leather recliners during the year. these recliners sell for $400 each. phillips had 500 recliners in finished goods inventory at the beginning of the year. at the end of the year, there were 700 recliners in finished goods inventory. phillips’ accounting records provide the following information: purchases of raw materials .$320,000beginning materials inventory ,800ending materials inventory 66,800direct labor ..200,000indirect labor .40,000rent, factory building 42,000depreciation, factory equipment 60,000utilities, factory .11,900salary, sales supervisor ..90,000commissions, salespersons ..180,000general administration .300,000beginning work-in-process inventory 13,040ending work-in-process inventory .14,940beginning finished goods inventory ..80,000ending finished goods inventory .114,100required: 1. prepare a statement of cost of goods manufactured.2. compute the average cost of producing one unit of product in the year.3. prepare an income statement for external users.

Instructions are listed below

Explanation:

Giving the following information:

Production= 4,000 leather recliners during the year.

Sell price= $400 each.

Beginning finished good inventor (in units)= 500 recliners.

Ending finished good inventor (in units)=  700 recliners.

Purchases of raw materials =$320,000

Beginning materials inventory = 46,800

Ending materials inventory = 66,800

Direct labor= 200,000

Indirect labor= 40,000

Rent, factory building= 42,000

Depreciation, factory equipment= 60,000

Utilities, factory= 11,900

Salary, sales supervisor = 90,000

Commissions, salespersons= 180,000

General administration= 300,000

Beginning work-in-process inventory= 13,040

Ending work-in-process inventory= 14,940

Beginning finished goods inventory= 80,000

Ending finished goods inventory= 114,100

A) Prepare a statement of cost of goods manufactured

Direct materials:

Beginning materials inventory = 46,800

Purchases of raw materials =$320,000

Ending materials inventory = 66,800 (-)

Direct material used in production= $433,600

Direct labor= $200,000

Manufacturing overhead:

Rent, factory building= 42,000

Depreciation, factory equipment= 60,000

Utilities, factory= 11,900

Total manufacturing overhead= $123,900

Beginning work-in-process inventory= 13,040

Ending work-in-process inventory= 14,940 (-)

Cost of good manufactured in the period= $745,600

B) Average cost of production= (fixed cost + variable cost)/Q

Average cost of production= (cost of good manufactured + Salary, sales supervisor + Commissions, salespersons + General administration)/Q

Average cost of production= (745600 + 90000 + 180000 + 300000)/4000= $328,9

C) Income statement:

Sales= (500 units + 4000 - 700)*400= $1,520,000

Cost of goods sold=( beginning finished inventory + cost of good manufactured - ending finished inventory)= (80000 + 745600 - 114100)= $711,500

Gross profit= $808500

Selling expenses= 270,000

Administrative expenses= 300000

EBITDA= $238,500

answerreactive approach;