Scribble Incorporated is a small company in Western Maryland that manufactures pencils and pens. At the...

Scribble Incorporated is a small company in Western Maryland that manufactures pencils and pens. At the end of 2018, the company had the following inventory:

Work-in-Process Inventory, 12/31/18	$6,000
Finished Goods Inventory, 12/31/18	$2,000

They have provided the following per unit information regarding revenue and direct material costs for the fiscal year 2019:

Pencil Revenue	$1.50
Pen Revenue	$2.00
Graphite for Pencils	$0.10
Ink for Pens	$0.30
Plastic for Pens	$0.12
Wood for Pencils	$0.06
Rubber for Pencil Erasers	$0.03

The company has also provided the following information related to 2019:

Wages for Pencil Assembly Line Workers ($10/hour)	$100,000
Wages for Pen Assembly Line Workers ($10/hour)	$100,000
Salary for Assembly Stage Manager	$40,000
Salary for Preparation Stage Manager	$40,000
Salaries for 2 Office Employees	$40,000
Salary for CEO	$40,000
Depreciation on Assembly Plant Assets	$12,000
Depreciation on Preparation Plant Assets	$8,000
Depreciation on Office Building	$6,000
Utilities for Office Building	$1,000
Utilities for Assembly Stage	$1,200
Utilities for Preparation Stage	$800
Work in Process Inventory, 12/31/19	$4,000
Finished Goods Inventory, 12/31/19	$3,000

The process of creating pencils and pens consists of two stages. The first stage of production is preparation. During this stage, the assembly line workers prepare the graphite, wood, ink, and plastic for the second stage of production – assembly. The company has determined that direct labor hours and number of units sold (200,000 pencils and 100,000 pens) are the most accurate cost allocation bases in the preparation and assembly stages, respectively. Below is the amount of time that each product spends in the two different stages:

Stage	Pencils	Pens
Preparation	0.02 direct labor hours	0.06 direct labor hours
Assembly	0.03 direct labor hours	0.04 direct labor hours

The end goal is to calculate the operating income!

What is the manufacturing overhead rate for the assembly stage?
Calculate the cost per unit for a pencil using actual costing.
Calculate the total cost for a pen using actual costing.
Calculate the gross profit for each pencil.
Calculate the gross profit for each pen.
Calculate the Cost of Goods Manufactured for Scribble Inc. for 2019.
Calculate the Cost of Goods Sold for Scribble Inc. for 2019.
Calculate the Gross Profit for Scribble Inc. for 2019.
Calculate the Operating Income for Scribble Inc. for 2019

Thank you so much!

Solutions

Expert Solution

The Solution is as follows:

ekkarill92 answered 1 year ago

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