Chapter 1 Problems
- Sugars Company makes candy. During the most recent accounting period Sugars paid $5,000 for raw materials, $6,000 for direct labor, and $3,000 for overhead costs that were incurred to make candy. Sugars started and completed 20,000 units of candy of which 16,000 units were sold.
How much product cost did the company incur during the year?
What is the product cost per unit?
How much expense did the company recognize on the income statement?
- Newman Industries produces gizmos. During the most recent accounting period, Newman incurred the following costs to start and complete 125,000 gizmos: $90,000 of raw materials, $78,000 ofdirect labor, and $82,000 of manufacturing overhead. General, selling & administrative expenses amounted to $120,000.
Assuming Newman desires to earn a gross profit that is equal to 60% of product cost, the selling price per gizmo should be:
If Newman sells 110,000 gizmos, the amount of gross margin will be:
If Newman sells 110,000 gizmos, the amount of net income will be:
- The accounting records of the Aero Manufacturing Company (AMC) contained the following information:
Raw Materials$40,000Revenue $192,000
Sales Salaries 12,000Indirect Manufacturing Cost68,000
Depr. on Admin Equip 8,000Depr. on Production Equip14,000
Wages paid to 60,000Misc. G,S, & A. Exp18,000
Production Workers
AMC made 5,000 units of product and sold 4,000 units during the year. There was no beginning inventory.
What was the average PRODUCT cost per unit?
What is the ending inventory balance at the end of the year?
What is the amount net income appearing on the income statement?
- Tanaka Manufacturing Company began operations on January 1. During January, it started and completed 2,000 units of product. The company incurred the following costs:
1.)Raw materials purchased and used - $2,000
2.)Wages of production workers - $1,600
3.)Salaries of administrative and sales personnel - $800
4.)Depreciation on manufacturing equipment - $1,200
5.)Depreciation on administrative equipment - $960
Tanaka sold 1,600 units of product.
Determine the total product cost.
Determine the total cost of the ending inventory.
Determine the total cost of goods sold.
- Greenwave Products Co. incurred the following costs in 2007, the company’s first year of operations: $28,000 for direct materials used in manufacturing; $42,000 for manufacturing equipment to be straight-line depreciated over five years with a $2,000 salvage value; $16,000 for office furniture to be straight-line depreciated over four years with no salvage value; $14,000 for utilities associated with the manufacturing facility; $4,000 for office utilities; $38,000 for the company president’s salary; $24,000 for the manufacturing manager’s salary; $48,000 for production workers’ wages; and $22,000 for commissions paid to salespeople. The company produced 7,625 units during the year and sold 6,400 units for $22 each.
What would be the company’s gross margin for 2007?
What would be the company’s net income for 2007?