Question

During its first year of operations, Silverman Company paid $19,000 for direct materials and $10,500 for production workers' wages. Lease payments and utilities on the production facilities amounted to $9,500 while general, selling, and administrative expenses totaled $5,000. The company produced 6,500 units and sold 4,000 units at a price of $8.50 a unit.What is the amount of finished goods inventory on the balance sheet at year-end?

Answer 1

Answer:

The inventory value in the balance sheet is $ 15,000

Explanation:

Computation of per unit cost of production

Direct materials                                                                       $ 19,000

Direct Labor                                                                             $ 10,500

Production facilities related cost                                            $  9,500

Total cost of production                                                          $ 39,000

Units produced                                                                            6,500 units

Pr]oduction cost per unit                                                       $ 6 per unit

Units sold                                                                                      4,000 units

Units in hand ( 6,500 produced - 4,000 sold)                            2,500 units

Inventory value    2,500 units on hand * $ 6 per unit           $ 15,000

Answer 2

Answer:

$15000

Explanation:

DM + DL + Overhead = Total manufacturing cost

where, DM = Direct Material and DL = Direct Labor

(19000 + 10500 + 9500)/ 6500 = 6  

The cost of goods manufactured can be calculated by adding direct labor costs @ $10500, direct material costs @ $19000 and overhead costs @ $9500 and dividing it by 6500, we get $6.

Now, 4000 units has been sold so 2500 units are in ending inventory. The total amount in ending inventor is "

2500*6 = 15000