Question

Houston Office Equipment manufactures and sells metal shelving. It began operations on January 1, 2017 ?(click the icon to view the costs incurred during 2017 ?(Click the icon to view the inventory data. Revenues in 2017 were $423,500. The selling price per unit and the purchase price per pound of direct materials were stable throughout the year. The company's ending inventory of finished goods is carried at the average unit manufacturing cost for 2017. Finished-goods inventory at December 31, 2017, was $22,400. Read the requirements Requirement 1. Calculate direct materials inventory, total cost, December 31, 2017 Determine the formula, then calculate ending direct materials total cost. Ending direct materials total cost Requirement 2. Calculate finished-goods inventory, total units, December 31, 2017 Before we calculate the units for ending finished goods, we will first calculate the total cost of goods manufactured. (If a box is not used in the table, leave the box empty, do not enter a zero.)

Answer 1

Solution 1:

Total direct material used = Production unit * Direct material per unit = 106250 * 2 = 212500 pound

Cost of direct material used = $144,500

Cost per pound of direct material = $144,500 / 212500 = $0.68 per pound

Direct material ending inventory = 2100 lbs

Cost of ending direct material inventory = 2100 * $0.68 = $1,428

Solution 2:

Compuation of Cost of goods manufactured
Particulars	Varaible	Fixed	Total
Direct material used	$144,500.00	$0.00	$144,500.00
Direct manufacturing labor cost	$28,500.00	$0.00	$28,500.00
Plane energy cost	$3,000.00	$0.00	$3,000.00
Indirect manufacturing labor cost	$13,000.00	$19,000.00	$32,000.00
Other Indirect manufacturing cost	$10,000.00	$20,000.00	$30,000.00
Total Manufactuirng cost	$199,000.00	$39,000.00	$238,000.00

Manufacturing cost per unit = $238,000 / 106250 = $2.24 per unit

Value of ending inventory = $22,400

Units in finished goods inventory = $22.400 / $2.24 = 10000 units

Solution 3:

Nos of units sold = 106250 - 10000 = 96250 units

Total sales revenue = $423,500

Selling price per unit = $423,500 / 96250 = $4.40 per unit

Solution 4:

Houston Office Equipment
Income Statement
For the year ended December 31, 2017
Particulars		Amount
Sales		$423,500.00
Cost of goods sold:
Cost of goods manufactured	$238,000.00
Add: Beginning finished goods inventory	$0.00
Less: Ending finished goods inventory	$22,400.00
Cost of goods sold		$215,600.00
Gross Profit		$207,900.00
Opearting Cost:
Marketing, distribution and customer service cost - Variable	$122,000.00
Marketing, distribution and customer service cost - Fixed	$46,000.00	$168,000.00
Opearting Income (loss)		$39,900.00