Use the Following Information to Do a Horizontal Analysis of Boyer

question 140

Essay

Use the following information to do a horizontal analysis of Boyer Corporation's income statement for the current year and prior year:
$\begin{array} { | l | l | l | } \hline \text { Account } & \text { Current } & \text { Prior } \\\hline \text { Cost of goods sold } & \$ 341,600 & \$ 305,000 \\\hline \text { Selling/general expenses } & \$ 40,000 & \$ 32,000 \\\hline \text { Gross profit } & \$ 92,400 & \$ 84,000 \\\hline \text { Net income } & \$ 12,600 & \$ 12,000 \\\hline\end{array}$

---

Definitions:

Conversion Costs

Combined costs of direct labor and manufacturing overheads incurred to convert raw materials into finished products.

FIFO Method

An inventory valuation method where the first items acquired are the first ones sold, used to calculate the cost of goods sold and ending inventory.

Direct Materials Costs

The expenses incurred for raw materials that are directly involved in the manufacturing of products.

FIFO Method

A stock rotation system where the oldest stock (first in) is used or sold first (first out).