Answer:
1. $432,000
2. Finished goods $776,000
Work in progress $230,000
Explanation:
GINOCERAINC. IncomeStatement For the Year Ended December31, 2016
Sales$17,920,000
(1,120,000 units × $16 )
Less Cost of goods sold10,864,000
(1,120,000 units × $9.70)
Grossprofit$7,056,000
Sellingexpenses:
Infomercial campaign $2,000,000
Promotional materials3,600,000.
(60,000 stores × $60)
Shipping expenses 224,000
(1,120,000 units × $0.20)
Total selling expenses$5,824,000
Administrativeexpenses:
Legal expenses 800,000
Total operating expenses 6,624,000
($5,824,000+800,000)
Income from operations $432,000
($7,056,000-6,624,000)
Calculation of the Manufacturing cost per unit of Knife is:
Direct materials:
Hardened Steel Blanks $4.00
Wood for handle $1.50
Packaging $0.50
Total direct materials $6.00
Direct labor $0.50
Factory overhead $3.20
($800÷250 knives perhour)
Total manufacturing cost per knife $9.70
2. The Finished Goods balance for year end December 31, 2016 will be:
(1,200,000 units – 1,120,000 units) × $9.70 =
=80,000×$9.70
=$776,000
Work in Process, for the year ended December 31, 2016 will be:
25,000 units × ($6.00 + $3.20)
25,000 units × $9.2
= $230,000.
Note that materials, stamping as well as factory overhead have been applied to the 25,000 units, but direct assembly labor has not been applied for these units.
