Question

materials costing incurred and overhead 7. The Blanchett Company manufactures fishing rods. Last year, $516,000 were put into production. Direct labor of $430,000 was i equaled $645,000. The company had operating income for the year of $58,000 and manufactured and sold 86,000 fishing rods at a sales price of $21 per unit. Assume that there were no beginning or ending inventory balances in the work in process and finished goods direct inventory accounts. Required: A. B. C. Compute the per-unit conversion cost D. Compute the gross margin for the year E. Compute the selling and administrative expenses for the year Assume production amounted to 86,000 fishing rods and 80,000 F. were sold. Compute cost of goods sold. Assume production amounted to 86,000 fishing rods and 80,000 G. were sold. Compute the balance in ending finished goods inventory. Compute the per-unit product cost Compute the per-unit prime cost

Answer 1

43 40 A. Compute the per-unit product cost 41 42 Direct Material Direct Labor Overhead Total Product Cost (A) Number of units manufactured (B) Per-unit product cost (A/B) 44 516,000 430,000 645,000 1,591,000 86,000 18.50 45 46 47 48 49 B. Compute the per-unit prime cost 50 51 52 53 54 Direct Material Direct Labor Prime Cost (A) Number of Units manufactured (B) Per-Unit Prime Cost (A/B) 516,000 430,000 946,000 86,000 11.00 55 56

57 C. Compute the per-unit conversion cost 58 59 Direct Labor 430,000 60 Manufacturing Overhead 645,000 61 Conversion Cost (A) 1,075,000 62 Number of Units manufactured (B) 86,000 63 Per-Unit Conversion Cost(A/B) 12.50 64 65 D. Compute the gross margin for the year 66 67 Sales (86000*21) 1,806,000 68 Less Cost of Goods Sold 1,591,000 69 Gross Margin 215,000 70 71 E. Compute the selling and administrative expenses for the year 72 73 Gross Margin 215,000 74 Less Operating Income 58,000 75 Selling and Adminstrative expenses 157,000 76

79 77 F. Assume production amounted to 86,000 fishing rods and 80,000 were sold. Compute cost of goods sold. 78 Number of Units sold (A) 80,000 80 Per-unit product cost (B) 18.50 81 Cost of Goods sold (A*B) 1,480,000 82 83 G. Assume production amounted to 86,000 fishing rods and 80,000 were sold. Compute the balance in ending finished goods inventory. 84 85 86 87 Number of Units manufactured (A) Less Number of Units sold (B) Ending finished goods Inventory (A-B)=( C) Per-unit product cost (D) Ending finished goods Inventory (CD) 86,000 80,000 6,000 18.50 88 89 111,000 90 91