Question

The following information pertains to the most recent quarter at Precious Production Limited.

Purchases of raw materials	$	385,500
Raw materials inventory, beginning		46,800
Raw materials inventory, ending		76,500
Depreciation, factory		210,500
Insurance, factory		21,700
Direct labour		251,900
Maintenance, factory		126,800
Administrative expenses		293,600
Sales		2,208,000
Utilities, factory		116,500
Supplies, factory		4,170
Selling expenses		335,300
Indirect labour		271,900
Work in process inventory, beginning		28,850
Work in process inventory, ending		123,400
Finished goods inventory, beginning		42,550
Finished goods inventory, ending		170,200
1. Prepare a schedule of cost of goods manufactured. 2. prepare income statement 3. Assume that the company produced the equivalent of 16,000 units of product during the year. What was the average cost per unit for direct labour? What was the average cost per unit for factory insurance? (Round your answers to 2 decimal places.) 4. Assume that the company expects to produce 18,000 units of product during the coming year. What average cost per unit and what total cost would you expect the company to incur for direct materials at this level of activity? For factory insurance? (In preparing your answer, assume that direct materials is a variable cost and that depreciation is a fixed cost; also assume that depreciation is computed on a straight-line basis.) (Do not round intermediate calculations. Round "Average cost per unit" answers to 2 decimal places.) 5. Assuming the company produced 24,000 fully and partially finished units during the year, determine the cost components of the finished goods inventory, which is composed of 4,800 finished units. direct material....... direct labour....... manufacturing overhead..... total..........................................

Answer 1

	Schedule for manufacturing cost
	beginning raw material	46800
Add	Purchase of raw material	385500
	Total	432300
Less	Ending Raw material	76500
	Raw material used in production		355800
	Direct labor		251900
	Factory overheads
	Depreciation factory	210500
	Insurance factory	21700
	Maintenance factory	126800
	Utilities factory	116500
	Indirect labor	271900
	Supplies factory	4170
	Total factory overheads		751570
	Total manufacturing cost		1359270
Add	Beginning work in progress		28850
			1388120
less	Ending work in progress		123400
	Cost of goods manufactured		1264720
Add	Beginning finished goods inventory		42550
	Cost of goods available for sale		1307270
Less	Ending finished goods inventory		170200
	Cost of goods sold		1137070
	Schedule for net income
	Sales revenue		2208000
Less	Cost of goods sold		1137070
	Gross profit		1070930
Less	Expenses
	Admin expense	293600
	Selling expense	335300	628900
	Net operating income		442030