Question

Problem 1-20A ( Static) Product versus selling, general, and administrative (SG &A) costs LO 1-2, 1-3 Stuart Manufacturing Company was started on January 1 year 1 when it acquired $ 89,000 cash by issuing common stock. Stuart Immediately purchased office furniture and manufacturing equipment costing $32 and $40,000 , respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $ 4,000 salvage value and an expected useful life of six years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel Finally, the company paid $ 26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year Stuart completed production on 10,000 units of product and sold 8,000 units at a price of $9 each in year 1 (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP)

Help Save & Exit Chapter One Check Problem 1-20A (Static) Product versus selling, general, and administrative (SG&A) costs LO 1-2, 1-3 Stuart Manufacturing Company was started on January 1, year 1, when it acquired $89,000 cash by issuing common stock. Stuart immediately purchased office furniture and manufacturing equipment costing $32,000 and $40,000, respectively. The office furniture had an eight-year useful life and a zero salvage value. The manufacturing equipment had a $4,000 salvage value and an expected useful life of six years. The company paid $12,000 for salaries of administrative personnel and $21,000 for wages to production personnel. Finally, the company paid $26,000 for raw materials that were used to make inventory. All inventory was started and completed during the year. Stuart completed production on 10,000 units of product and sold 8,000 units at a price of $9 each in year 1. (Assume that all transactions are cash transactions and that product costs are computed in accordance with GAAP.) Required a. Determine the total product cost and the average cost per unit of the inventory produced in year 1. (Round "Average cost per unit" to 2 decimal places.) b. Determine the amount of cost of goods sold that would appear on the year 1 income statement. (Do not round intermediate calculations.) c. Determine the amount of the ending inventory balance that would appear on the December 31, year 1, balance sheet. (Do not round intermediate calculations.) d. Determine the amount of net income that would appear on the year 1income statement e. Determine the amount of retained earnings that would appear on the December 31, year 1, balance sheet. f. Determine the amount of total assets that would appear on the December 31, year 1, balance sheet. a. Total product cost

Answer 1

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A B C D E F G H 1 1 N 89000 32000 3 Total product cost Wages to production Payment for raw materials Depreciation Total product cost Average cost per unit Amount 21000 26000 6000 53000 4 40000 5 0 6 5.3 Issuing common stock Office furniture Manufacturing equipment salvage value-furniture Expected useful life-furniture salvage value-Equipment Expected useful life-Equipment Salaries of administrative Wages to production Payment for raw materials 7 8 Years 4000 6 years 12000 8 42400 2 3 Cost of goods sold Ending inventory 9 106001 10 21000 26000 11 4 72000 12 42400 13 10000 Sales Less: Cost of goods sold Gross Margin Less: salaries of administrative personnel Depreciation expense - office furniture Net Income Production units Sold units Sale price 29600 12000 14 8000 15 9 4000 13600 16 17 18 5 13600 19 6 30000 20 Retained earnings Cash Equipment Office furniture Ending inventory Total assets 21 22 34000 28000 10600 102600 23 24 25 26 Sheet169 Sheet170 Sheet171 Sheet172 Sheet173 Sheet174 Sheet175 Stats

For calculation ref:

A A B С D E F G H 1 1 1 Amount =C10 2 89000 3 32000 Total product cost =B10 =B11 Depreciation Total product cost Average cost per unit 4 40000 =C11 =(C4-C7)/C8 =SUM(H2:H4) =H5/C13 5 0 6 Years Issuing common stock Office furniture Manufacturing equipment salvage value-furniture Expected useful life-furniture salvage value-Equipment Expected useful life-Equipment Salaries of administrative Wages to production Payment for raw materials 8 4000 7 years 2 8 9 6 12000 Cost of goods sold Ending inventory =H6*C14 =(C13-C14) *H6 3 10 21000 11 26000 4 12 13 10000 Sales Less: Cost of goods sold Gross Margin Less: salaries of administrative personnel Depreciation expense - office furniture Net Income Production units Sold units Sale price C14*15 =H8 =H11-H12 =C9 =C3/C6 =H13-H14-H15 14 8000 15 9 16 17 18 5 =H16 19 6 20 Retained earnings Cash Equipment Office furniture Ending inventory Total assets 21 =C2-C3-C4-C9-C10-C11+C14*C15 =C4-H4 =C3-H15 =H9 =SUM(H19:H22) 22 23 24 25