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PROBLEM 2-21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [LO2, LO3, LO4, LO5, LO6] Selected account balances for the year ended December 31 are provided below for Superior Company: Selling and administrative salaries Purchases of raw materials ... Direct labor $110,000 $290,000 ? Advertising expense Manufacturing overhead Sales commissions $ 80,000 $270,000 $50,000 Inventory balances at the beginning and end of the year were as follows: Beginning of End of the Year the Year Raw materials.. Work in process. Finished goods $40,000 $10,000 $35,000 $50,000 The total manufacturing costs for the year were $683,000; the goods available for sale totaled S740,000; and the cost of goods sold totaled $660,000. Required: 1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company's income statement for the year. 2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced during the year. Compute the average cost per unit for direct materials used and the average cost per unit for manufacturing overhead. 3. Assume that in the following year the company expects to produce 50,000 units and manufac- turing overhead is fixed. What average cost per unit and total cost would you expect to be in- curred for direct materials? For manufacturing overhead? (Assume that direct materials is a variable cost.) 4. As the manager in charge of production costs, explain to the president the reason for any dif- ference in average cost per unit between (2) and (3) above.

PROBLEM 2-21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [LO2, LO3, LO4, LO5, LO6] Selected account balances for the year ended December 31 are provided below for Superior Company: Selling and administrative salaries Purchases of raw materials ... Direct labor $110,000 $290,000 ? Advertising expense Manufacturing overhead Sales commissions $ 80,000 $270,000 $50,000 Inventory balances at the beginning and end of the year were as follows: Beginning of End of the Year the Year Raw materials.. Work in process. Finished goods $40,000 $10,000 $35,000 $50,000 The total manufacturing costs for the year were $683,000; the goods available for sale totaled S740,000; and the cost of goods sold totaled $660,000. Required: 1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company's income statement for the year. 2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced during the year. Compute the average cost per unit for direct materials used and the average cost per unit for manufacturing overhead. 3. Assume that in the following year the company expects to produce 50,000 units and manufac- turing overhead is fixed. What average cost per unit and total cost would you expect to be in- curred for direct materials? For manufacturing overhead? (Assume that direct materials is a variable cost.) 4. As the manager in charge of production costs, explain to the president the reason for any dif- ference in average cost per unit between (2) and (3) above.

Financial & Managerial Accounting
Financial & Managerial Accounting
14th Edition
ISBN:9781337119207
Author:Carl Warren, James M. Reeve, Jonathan Duchac
Publisher:Carl Warren, James M. Reeve, Jonathan Duchac
Chapter26: Lean Manufacturing And Activity Analysis
Section: Chapter Questions
Problem 26.18EX: Cost of quality and value-added/non-value-added reports for a service company A. Using the...
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PROBLEM 2–21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [LO2, LO3, LO4, LO5, LO6] Selected account balances for the year ended December 31 are provided below for Superior Company: Selling and administrative salaries $110,000 Purchases of raw materials $290,000 Direct labor Advertising expense Manufacturing overhead 8 80,000 $270,000 $ 50,000 Sales commissions Inventory balances at the beginning and end of the year were as follows: Beginning of the Year End of the Year Raw materials $ 40,000 $ 10,000 Work in process. Finished goods ? $35,000 $ 50,000 ? The total manufacturing costs for the year were $683,000; the goods available for sale totaled $740,000; and the cost of goods sold totaled $660,000. Required: 1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company's income statement for the year. 2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced during the year. Compute the average cost per unit for direct materials used and the average cost per unit for manufacturing overhead. 3. Assume that in the following year the company expects to produce 50,000 units and manufac- turing overhead is fixed. What average cost per unit and total cost would you expect to be in- curred for direct materials? For manufacturing overhead? (Assume that direct materials is a variable cost.) 4. As the manager in charge of production costs, explain to the president the reason for any dif- ference in average cost per unit between (2) and (3) above.
Transcribed Image Text:PROBLEM 2–21 Schedule of Cost of Goods Manufactured; Income Statement; Cost Behavior [LO2, LO3, LO4, LO5, LO6] Selected account balances for the year ended December 31 are provided below for Superior Company: Selling and administrative salaries $110,000 Purchases of raw materials $290,000 Direct labor Advertising expense Manufacturing overhead 8 80,000 $270,000 $ 50,000 Sales commissions Inventory balances at the beginning and end of the year were as follows: Beginning of the Year End of the Year Raw materials $ 40,000 $ 10,000 Work in process. Finished goods ? $35,000 $ 50,000 ? The total manufacturing costs for the year were $683,000; the goods available for sale totaled $740,000; and the cost of goods sold totaled $660,000. Required: 1. Prepare a schedule of cost of goods manufactured and the cost of goods sold section of the company's income statement for the year. 2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced during the year. Compute the average cost per unit for direct materials used and the average cost per unit for manufacturing overhead. 3. Assume that in the following year the company expects to produce 50,000 units and manufac- turing overhead is fixed. What average cost per unit and total cost would you expect to be in- curred for direct materials? For manufacturing overhead? (Assume that direct materials is a variable cost.) 4. As the manager in charge of production costs, explain to the president the reason for any dif- ference in average cost per unit between (2) and (3) above.
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