Reference no: EM132501812

Keystone Winery produces a number of fine varietals. The following data pertains to 2008:

Depreciation - wine making equipment $5,000

Direct labor - grape picking and pressing 48,000

Bottle, cork, and label purchases         11,000

Crop insurance                                1,120

Cellar security system                      5,000

Utilities - climate control                  3,000

General & administrative expenses     22,000

Indirect labor                                 3,000

Indirect materials - yeast, finings, etc. 300

Sales revenue                             220,000

Selling & marketing expenses          115,405

Inventories:

Beginning grape inventory $2,000

Beginning work-in-process inventory 5,050

Beginning finished goods inventory 22,300

Ending grape inventory                3,000

Ending work-in-process inventory    7,600

Ending finished goods inventory 18,300

• Work-in-process inventory refers to wine that is undergoing fermentation. Finished goods inventory refers to bottled wine that has not yet been sold. Selling and administrative expense (period costs) include bottle, cork, and label purchases.

Question a. Compute the cost of wine produced.

Question b. Compute the cost of goods sold.

Question c. Compute the net income.