DescriptionFinancial and Managerial Accounting (ACT501)
Case No.3: H&Y Drug Corporation manufactures most of its three pharmaceutical products in
India. Inventory balances for March and April follow. (10 Marks)
During April, purchases of direct materials, which include natural materials, basic organic
compounds, catalysts, and suspension agents, totaled $ 612,600 . Direct labor costs were
$160,000 , and actual overhead costs were $ 303,500 . Sales of the company’s three products for
April totaled $2,188,400 . General and administrative expenses were $362,000.
1. Prepare a statement of cost of goods manufactured and an income statement through
operating income for the month ended April 30.
2. Why is it that the total manufacturing costs do not equal the cost of goods manufactured?
3. What additional information would you need to determine the profitability of each of the
three product lines?
4. CONCEPT Indicate whether each of the following is a product cost or a period cost:
1. Import duties for indirect materials
2. Shipping expenses to deliver manufactured products to the United States
3. Rent for manufacturing facilities in India
4. Salary of the American manager working at the Indian manufacturing facilities
5. Training costs for an Indian accountant
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