Question

In: Accounting

Octaone produces luxury water cooler. This is their first year in operation (i.e. starting the year...

Octaone produces luxury water cooler. This is their first year in operation (i.e. starting the year with $0 balances). The company produced 9,000 units (started and completed) and sold 8,000 units for $560,000. Octaone paid $10 per unit in direct materials and $5 per unit in wages for production workers. Lease payments and utilities on the production facilities amounted to $22,500 and selling & administrative expenses were $17,000.

Answer the following questions about Octaone.

A. What is the cost per unit of a water cooler?

B. What is the gross margin per unit of a water cooler?

C. What is the balance in the inventory account before any water coolers were sold?

D. What is the cost of goods sold for the year?

E. What is the cost of inventory on the balance sheet at the end of the year?

F. What is the net income for the year?

Label and place your final answer for A-F at the top of the answer box. Then after the answer to F, label and show your work for each part of the question. Just show me numbers – that is usually enough for me to follow your logic.

Solutions

Expert Solution

--Requirement A

Direct Material per unit $                                   10.00
Direct Labor per unit $                                     5.00
Manufacturing Overhead $              22,500.00
Units produced 9000
Manufacturing overhead per unit [22500 / 9000] $                                     2.50
Cost per unit $                                   17.50

--Requirement B

A Sale price per unit [560000 / 8000] $                      70.00
B Cost per unit $                      17.50
C = A - B Gross Margin per unit $                      52.50

--Requirement C

A Cost per unit $                      17.50
B Units produced                          9,000
C = A x B Balance in Inventory account before sale $           157,500.00

--Requirement D

A Cost per unit $                      17.50
B Units sold                          8,000
C = A x B Cost of Goods Sold $           140,000.00

--Requirement E

A Cost per unit $                      17.50
B Units in ending Inventory                          1,000
C = A x B Cost of Inventory on Balance Sheet $              17,500.00

--Requirement F

A Gross Margin per unit $                      52.50
B Units Sold                          8,000
C = A x B Total Gross Profits $           420,000.00
D Selling & Admin expenses $              17,000.00
E = C - D Net Income $           403,000.00

ekkarill92 answered 1 year ago
Next > < Previous

Related Solutions

Miller produces luxury water cooler. This is their first year in operation (starting the year with...
Miller produces luxury water cooler. This is their first year in operation (starting the year with $0 balances). The company produced 10,000 units (started and completed) and sold 9,000 units for $570,000. Miller paid $12 per unit in direct materials and $7 per unit in wages for production workers. Lease payments and utilities on the production facilities amounted to $23,500 and selling & administrative expenses were $18,000. Answer the following questions about Miller. A.  What is the cost per unit of...
The projected balance of accounts payable at the end of the first year of operation is?
A family friend, Mr. Burn Out availed of the early retirement scheme offered by his employer. He said that he was already tired of the same routine of spending eight full hours in an office doing the same thing for the last twenty years. Mr. Burn Out plans to get into the field of entrepreneurship. He would invest part of his retirement pay in a business that would deal with the sale of medical supplies to local clinics and hospitals....
Johnsn and Hill formed a company, and 2018 was their first year of operation. a) To...
Johnsn and Hill formed a company, and 2018 was their first year of operation. a) To establish Johnson & Hill each contributed a total of $55,000 in exchange for common stock. b) Johnson & Hillt specializes in high-end parties. The first year they conducted 96 events and revenue for the first year amounted to $480,000, of which 95% was to be paid by the date of the event and the remainder due within 30 days of the event c) Clients...
Johnsn and Hill formed a company, and 2018 was their first year of operation. a) To...
Johnsn and Hill formed a company, and 2018 was their first year of operation. a) To establish Johnson & Hill each contributed a total of $55,000 in exchange for common stock. b) Johnson & Hillt specializes in high-end parties. The first year they conducted 96 events and revenue for the first year amounted to $480,000, of which 95% was to be paid by the date of the event and the remainder due within 30 days of the event c) Clients...
The following transactions apply to Jova Company for Year 1, the first year of operation:
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $19,000 of common stock for cash. Recognized $219,000 of service revenue earned on account. Collected $171,900 from accounts receivable. Paid $134,000 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 1 percent of sales on account. The following transactions apply to Jova for...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $16,000 of common stock for cash. Recognized $64,000 of service revenue earned on account. Collected $57,200 from accounts receivable. Paid operating expenses of $36,200. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for Year 2:...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $14,000 of common stock for cash. Recognized $214,000 of service revenue earned on account. Collected $166,400 from accounts receivable. Paid $129,000 cash for operating expenses. Adjusted the accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $17,500 of common stock for cash. Recognized $62,500 of service revenue earned on account. Collected $56,000 from accounts receivable. Paid operating expenses of $36,800. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account The following transactions apply to Jova for Year 2...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued...
The following transactions apply to Jova Company for Year 1, the first year of operation: Issued $15,500 of common stock for cash. Recognized $64,500 of service revenue earned on account. Collected $57,600 from accounts receivable. Paid operating expenses of $36,000. Adjusted accounts to recognize uncollectible accounts expense. Jova uses the allowance method of accounting for uncollectible accounts and estimates that uncollectible accounts expense will be 2 percent of sales on account. The following transactions apply to Jova for Year 2:...
Johnsn and Hill formed a company, and 2018 was their first year of operation. To establish...
Johnsn and Hill formed a company, and 2018 was their first year of operation. To establish Johnson & Hill each contributed a total of $60,000 in exchange for common stock. Johnson & Hill specializes in high-end parties. The first year they conducted 94 events and revenue for the first year amounted to $480,000, of which 95% was to be paid by the date of the event and the remainder due within 30 days of the event. Clients owe $16,000 at...
ADVERTISEMENT
Subjects
ADVERTISEMENT
Latest Questions
ADVERTISEMENT