Question

Consider the following data of the campbell company for the year 2016:

sandpaper: $2000

materials handling costs: $70000

lubricants and coolants: $5000

Miscellaneous and manufacturing labor: $40000

Direct manufacturing labor: $300,000

Direct materials, Jan 1 2016; $40,000

Finished goods Jan 1, 2016: $100,000

Finished goods Dec 31, 2016: $150,000

Work in process Jan 1,2016: $10,000

Work in process Dec 31,2016: $14,000

plant leasing costs: $54,000

Depreciation plant equipment: 36,000

property taxes on plant equipment: 4000

fire insurance on plant equipment: 3000

Direct materials purchased: 460,000

Direct materials, Dec 31, 2016: 50,000

Sales: 1,260,000

sales commissions: 60,000

sales salaries: 100,000

Shipping costs: 70,000

Administration costs: 100,000

1) Prepare an income statement with a separate supporting schedule of costs of goods manufactured....

2) Suppose the direct materials costs are tied to a production of 900,000 units. what is the unit cost for the direct materials assigned to each unit produced ??

Answer 1

1)	COST OF GOODS MANUFACTURED
	WIP Jan 1, 2016		10000
	Direct materials:
	Direct materials, Jan 1 2016	40000
	Direct materials purchased	460000
	Total direct materials available	500000
	Direct materials, Dec 31, 2016	50000
	Direct materials used		450000
	Direct manufacturing labor		300000
	Manufacturing overhead:
	Sand paper	2000
	Materials handling costs	70000
	Lubricants and coolants	5000
	Miscellaneous and manufacturing labor	40000
	Plant leasing costs	54000
	Depreciation on plant equipment	36000
	Property taxes on plant equipment	4000
	Fire insurance on plant equipment	3000	214000
	Total manufacturing cost		974000
	WIP Dec 31, 2016		14000
	Cost of goods manufactured		960000
	INCOME STATEMENT
	Sales		1260000
	Cost of goods sold:
	Finished goods Jan 1, 2016	100000
	Cost of goods manufactured	960000
	Cost of goods available for sale	1060000
	Finished goods Dec 31, 2016	150000
	Cost of goods sold		910000
	Gross profit		350000
	Operating expenses:
	Sales commissions	60000
	Sales salaries	100000
	Shipping costs	70000
	Administration costs	100000	330000
	Net operating income		20000
2)	Unit cost for direct material = 450000/900000 =	$             0.50