Question

Walker is the owner of Walker's Racers and expects sales of 9000 racers this period at a price of 95 per racer. His beginning finished good inventory includes 7000 racers from last period that each had a cost of $ 60. His desired finished goods ending inventory is 7000 racers. Each racers requires 1 wedge of direct material. He begins the period with 3000 wedges that cost $ 8 each. He desires 4000 wedges in ending inventory. Wedges purchased this period cost $ 10 each.   Every racer requires 2 hours of labor at a rate of $ 12 per labor hour. MOH is assigned based on labor hours at a rate of $ 20 per labor hour. Beginning and ending WIP inventories are negligible; so treat as $0.

Calculate Walker's racer's gross margin.

Note you must first do each and all of the following:

a. Determine how many racers Walker must produce?

b. Determine the total number of wedges that must be purchased?

c. Determine the total cost of the wedges purchase?

d. Determine the total cost of wedges used in production?

e. Determine the total cost of required labor?

f. Determine the total MOH cost?

g. Determine the Cost of goods manufactured?

h. Determine the cost of a single racer in finished goods inventory?

i.  Determine the total value of ending finished goods inventory?

j. Determine the cost of goods sold?

Answer 1