Below is financial information for Campus Fashion Inc. (The Company) for the year ended December 31, 2018 prepared by its inexperienced accountant.

Campus Fashion Inc.
Income Statement
at December 31, 2018
Revenues:
Sales revenue				$ 300,000
Dividend Revenues				1,800
Sales commission payable				1,000
Allowance for Uncollectable accounts				2,000
Royalty Revenue				500
Gain on sale of office equipment				1,500
Total revenues				306,800
Less: Cost of goods manufactured				(243,100)
Gross profit				63,700
Operating expenses:
Selling			30,000
General and administrative			34,000
Restructuring Cost			6,000
Short-term investments			5,400
Dividend paid			600
Interest expense			2,000
Total operating expenses				78,000
Net loss				(14,300)

Campus Fashion Inc.
Schedule of Cost of Goods Manufactured
at December 31, 2018
Direct materials purchased				$ 100,000
Direct manufacturing labor				43,000
Manufacturing overhead:
Indirect materials			$ 3,000
Factory Bonus Payable			(2,500)
Indirect manufacturing labor costs			13,000
Factory Equipment			48,000
Research and development expense			6,000
Factory rent			18,000
Prepaid Factory insurance			600
Repair of Delivery truck			400
Factory Insurance			2,000
Other Indirect manufacturing costs			4,600
Factory utilities			7,000
Total manufacturing overhead				100,100
Cost of goods manufactured				$ 243,100

The accountant did not take the following items into consideration when preparing the statements above.

a. Factory equipment was purchased on July 1, 2018 and has a useful life of 5 years with $2,000 salvage (residual) value.

The company uses the straight-line method of depreciation

b. Inventory balances for 2018 are:

The company’s tax rate is 21%
The company’s president is disappointed with the results of operations and has hired your accounting firm to review the financial statements.

Required:

1. As one step in gathering data for the president, prepare a revised schedule of cost of goods manufactured for the perido ended December 31, 2018.

2. As a second step, prepare a corrected multiple-step income statement for the year ended December 31, 2018.

3. Calculate the cost of producing one unit if the compan produced 50,000 units in 2018.

Answer rating: 100% (QA)

1 2 Campus Fashion Inc Cost of Goods Manufactured December 31 2018 Direct Materials Add Direct Begin... View the full answer