Question

Old World Furniture constructs and sells executive style conference tables. The selling price is $15,000 per table. A unique feature is that the only raw material used in the construction of each table. other than indirect materials like glues and screws, comes entirely from a single tree. Tree prices and other costs of production have remained stable, and Old World is able to use each tree purchased without incurring any significant spoilage. Consider the following "disorganized" information and complete the indicated requirements.

Ending work in process (900 Tables) $2,700,000

Selling price per table $15,000

Ending finished goods (300 Tables) $2,100,000

Indirect labor incurred during the period $187,500

Raw materials transferred into production (1,050 Trees) $1,050,000

Beginning finished goods (600 tables) $4,200,000

Cost of glues and screws $52,500

Beginning work in process $2,197,500

Ending raw materials (750 Trees) $750,000

Direct labor incurred during the period $4,950,000

Selling, general, and administrative costs incurred $1,725,000

Depreciation of factory equipment $112,500

Raw material purchases during the period (1,350 Trees) $1,350,000

All other factory overhead $450,000

Tables sold (1,200 Tables)

a) Complete the reconciliation of units on the accompanying blank worksheet, showing the "unit" activity in raw materials, work in process, and finished goods.

b) Calculate the cost of goods manufactured

c) Calculate the cost of goods sold.

d) Calculate net income. Assume an income tax rate of 30%.

Answer 1