Income Statement, Cost of Services Provided, Service Attributes
Berry Company is an architectural firm located in Detroit, Michigan. The company works with small and medium-size construction businesses to prepare building plans according to the cli- ent's contract. The following data are provided for the previous year:
|
Number of designs completed and sold
|
700
|
Direct labor
|
800000
|
|
Beginning inventory of direct materials
|
$20,000
|
Manufacturing overhead
|
100000
|
|
Beginning inventory of designs in process
|
60000
|
Administrative expense
|
150000
|
|
Ending inventory of direct materials
|
10000
|
Selling expense
|
60000
|
|
Ending inventory of designs in process
|
100000
|
Beginning inventory of finished designs
|
300000
|
|
Purchases, direct materials
|
40000
|
Ending inventory of finished designs
|
280000
|
Required:
1. Calculate the cost of goods manufactured.
2. Calculate the cost of goods sold.
3. Assume that the average fee for a design is $2,100. Prepare an income statement for Berry.
4. CONCEPTUAL CONNECTION Refer to the cost of goods sold (calculated in Requirement 2). What is the dominant cost? Briefly explain why this cost is the dominant one for Berry.