Question

Prime Cost, Conversion Cost, Preparation of Income Statement: Manufacturing Firm Kildeer Company makes easels for artists. During the last calendar year, a total of 32,000 easels were made, and 33,000 were sold for $56 each. The actual unit cost is as follows: Direct materials $13.00 Direct labor 5.00 Variable overhead 8.00 Fixed overhead 16.00 Total unit cost $42.00 The selling expenses consisted of a commission of $1.10 per unit sold and advertising co-payments totaling $93,500. Administrative expenses, all fixed, equaled $176,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was $155,400 for 3,700 easels.Required:1. Calculate the number and the dollar value of easels in ending finished goods inventory.Ending units Dollar amount $FeedbackRemember that cost of goods manufactured increases finished goods inventory.2. Prepare a cost of goods sold statement.Kildeer CompanyStatement of Cost of Goods SoldFor the Year Ended December 31Cost of goods manufactured $Add: Beginning finished goods inventory Cost of goods available for sale $Less: Ending finished goods inventory Cost of goods sold $

Answer 1

Answer:

Results are below.

Explanation:

First, we need to calculate the unitary production cost:

Direct materials= 13

Direct labor= 5

Variable overhead= 8

Fixed overhead= 16

Total unit cost= $42

Now, the ending inventory in units and cost:

Beginning inventory= 3,700

Production= 32,000

Sales= (33,000)

Ending inventory in units= 2,700

Ending inventory value= 2,700*42= $113,400

Finally, the cost of goods sold:

COGS= beginning finished inventory + cost of goods manufactured - ending finished inventory

COGS= 155,400 + (32,000*42) - (2,700*42)

COGS= $1,386,000