The information below has been taken from the cost records of Tink Co. for the past year: Direct materials used in production $326 Direct labor 225 OH allocated at 60% of DL$ ? Actual OH 145 Cost of goods available for sale 826 Sales revenue 900 Selling & administrative expenses 30 Inventories: Beginning Ending Work in process 80 30 Finished goods ? 110 SHOW ALL COMPUTATIONS: a) Prepare a statement of cost of goods manufactured & sold for T Co. (use normal costing) b) Prepare the closing entry for OH using COGS c) Prepare the Income Statement.

Part a

i. Statement of cost of goods manufactured

Beginning Work In Process                                       $80

Add Manufacturing Cost ;

Direct Materials                                           $326

Direct Labor                                                 $225

Applied Overheads ($225 x 60%)               $135   $686

Less Ending Work in Process                                  ($30)        

Cost of Goods Manufactured                                  $736

ii. Statement of Cost of Goods Manufactured

Opening Finished Inventory                                     $90 (calculated)

Add Cost of Goods Manufactured                          $736

Goods Available for sale                                         $826

Less Ending Inventory                                             ($110)

Cost of Goods Sold                                                  $716

Add under -applied overheads                                 $10

Adjusted Cost of Goods Sold                                 $726

Part b

Debit : Cost of Goods Sold $10

Credit : Overheads $10

Part c

Tink Co.

Income Statement for the year

Sales Revenue                                      $900

Less Cost of Sales                                ($726)

Gross Profit                                             $174

Less Expenses

Selling & administrative expenses       ($30)

Net Income (Loss)                                   $144

Explanation:

At the end of the period compare amount of actual overheads to applied overheads

Since, Actual overheads > Applied overheads, overheads have been under-applied

Under-applied overheads = $145 - $135 = $10

The amount of under-applied overheads is added to cost of goods sold.

Note : The missing figure of Beginning Finished Inventory has been determined using missing figure approach to be $90

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.

income statement is prepared in order to show the profits and loss of a business. in order to prepare the income statement she should collect all the income and expenses of the product with the cost of production.