Various cost and sales data for Meriwell Company for the just completed year appear in the worksheet
Question:
Of the $105,000 of manufacturing overhead, $15,000 is variable and $90,000 is fixed.
Required:
1. Prepare a schedule of cost of goods manufactured.
2. Prepare an income statement.
3. Assume that the company produced the equivalent of 10,000 units of product during the year just completed. What was the average cost per unit for direct materials? What was the average cost per unit for fixed manufacturing overhead?
4. Assume that the company expects to produce 15,000 units of product during the coming year. What average cost per unit and what total cost would you expect the company to incur for direct materials at this level of activity? For fixed manufacturing overhead? Assume that direct materials is a variable cost.
5. As the manager responsible for production costs, explain to the president any difference in the average costs per unit between (3) and (4) above.
Step by Step Answer:
Managerial Accounting for Managers
ISBN: 978-0073527130
2nd edition
Authors: Eric Noreen, Peter Brewer, Ray Garrison