The following data refer to Industrial Manufacturing Pty Ltd for the current years:
1. Prepare Industrial’s schedule of cost of goods manufactured for the current year.
2. Prepare Industrial’s schedule of cost of goods sold. The company closes overapplied or underapplied overhead into cost of goods sold.
3. Prepare Industrial’s income statement.
4. Construct an Excel’ spreadsheet to solve all of the preceding requirements. Show how the solution will change if the following data change.
(a) Suppose Industrial’s had increased its production in the current year by 20 per cent. Would the direct material cost shown on the schedule of the cost of goods manufactured have been larger or the same? Why?
(b) Answer the same question as in requirement (a) for depreciation on the factory building.
(c) Suppose that only half of the $90,000 depreciation on equipment was related to factory machinery, and the other half was related to selling and administrative equipment. How would this have changed the schedule of cost of goods manufactured?