Question

As in the previous Participation Exercise, the Khalid Company manufactures and sells Paso-the-Salsa, which is a bottled condiment used on a variety of foods. Each bottle is sold for $6. The company recently had the following costs to produce 12,000 units of its product during August: A. Rent of $5,000 on a billboard to help advertise the product B. Rent on factory and equipment of $8,000 C. Total payroll for hourly paid, factory workers $24,000 Tomatoes, onions, spices and bottles $18,000 D. E. Total payroll for salaried, administrative staff $6,000 Answer the next three questions below using the data above along with the appropriate product cost and period cost classifications from the previous Participation Exercise).

Answer 1

Cost of Units produced = $8000+24000+18000 = $50000

Unit Product Cost = $50000/12000 = $4.17 per unit

Since Details about units sold and units in ending inventory is not given, values cannot be calculated exactly.

8.
Net Income = Units sold x ($6 - 4.17) - $11000

9.
Ending Inventory = Units in ending inventory x $4.17

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