Marys Mugs produces and sells various types of ceramic mugs. The business began operations on January 1,
Question:
Mary’s Mugs produces and sells various types of ceramic mugs. The business began operations on January 1, Year 1, and its costs incurred during the year include these:
Variable costs (based on mugs produced):
Direct materials cost . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 6,000
Direct manufacturing labor costs . . . . . . . . . . . . . . . . . . . . . . 27,000
Indirect manufacturing costs. . . . . . . . . . . . . . . . . . . . . . . . . . 5,400
Administration and marketing . . . . . . . . . . . . . . . . . . . . . . . . . 3,375
Fixed costs:
Administration and marketing costs . . . . . . . . . . . . . . . . . . . . 18,000
Indirect manufacturing costs. . . . . . . . . . . . . . . . . . . . . . . . . . 6,000
On December 31, Year 1, direct materials inventory consisted of 3,750 pounds of material. Production in that year was 20,000 mugs. All prices and unit variable costs remained constant during the year. Revenues for year 1 were $73,312. Finished goods inventory was $6,105 on December 31, Year 1. Each finished mug requires 0.4 pounds of material.
Required
Compute the following:
a. Direct materials inventory cost, December 31, Year 1.
b. Finished goods ending inventory in units on December 31, Year 1.
c. Selling price per unit.
d. Operating profit for year 1.
The ending inventory is the amount of inventory that a business is required to present on its balance sheet. It can be calculated using the ending inventory formula Ending Inventory Formula =...
Step by Step Answer:
Fundamentals of Cost Accounting
ISBN: 978-0077398194
3rd Edition
Authors: William Lanen, Shannon Anderson, Michael Maher