Question Completion:
Assume that the dollar amounts given above are for the equivalent of 40,000 units produced/sold during the year.
Answer:
B-Fun Company
a. The average cost per unit for direct materials = $8.00
b. The total cost to be incurred for direct materials = $400,000
Explanation:
a) Data and Calculations:
Selling and administrative salaries = $110,000
Purchase of raw materials = $290,000
Direct labor = ?
Advertising expense = $80,000
Manufacturing overhead = $270,000
Sales Commissions = $50,000
Inventory balances:
Raw materials $40,000 $10,000
Work in process ? $35,000
Finished goods $50,000 ?
Total manufacturing costs = $683,000
Goods available for sale = $740,000
Cost of goods sold = $660,000
1. Ending inventory of finished goods:
Beginning inventory $50,000
Cost of manufacturing 683,000
Cost of goods sold (660,000)
Ending inventory $73,000
2. Cost of raw materials:
Beginning inventory = $40,000
Purchases 290,000
less Ending inventory (10,000)
Cost of raw materials $320,000
3. Direct labor:
Cost of manufacturing = $683,000
cost of raw materials (320,000)
manufacturing overhead (270,000)
Direct labor $93,000
4. Beginning work in process:
Ending work in process = $35,000
Cost of manufacturing 683,000
Less: Direct labor (93,000)
Manuf. overhead (270,000)
Direct materials (320,000)
Beginning work in process $35,000
Current Following
Year Year
Raw materials:
Average cost per unit $8.00 $8.00
Units of materials 40,000 50,000
Total cost $320,000 $400,000
Average cost per unit = Total materials cost/Units of materials
= $320,000/40,000 = $8
Total manufacturing cost for the following year = $8 x 50,000 units
= $400,000
