Answer:
Additional material purchased must not be included in the Cost Of goods Manufactured as it includes only direct materials used in production.
Explanation:
Wo inventors
Innovation, Inc
Sales $ 1975,440
Direct Material
4 lb. of a material costing $10 per lb.( $40 *10,000) = $ 400,000
Direct labor
2 hrs. of a metal former's time at $22 per hr.($44*10,000)= $440,000
0.6 hr. of an assembler's time at $16 per hr.($9.6*10,000) = $ 96,000
Rent for a factory building $92,920
Rent for machinery, $57,320
Indirect material $43,400
Other production overhead $466,560
Total Manufacturing Costs $ 1596,200
Additional 2000 units Mfg Costs $ 319,240
Total Manufacturing Costs $ 1915,440
<u>Profit = 15 % of $ 400,000 $ 60,000</u>
<u />
<u><em>Working EPS</em></u>
<em><u>Additional 2000 units should be produced for next year inventory</u></em>
1. Unit Costs = Total Manufacturing Costs/ No. Of units= 1596,200/10,000= $159.62
2. Additional Costs Of 2000 units = $ 159.62 * 2000= $ 319,240
3. Total Manufacturing Costs Of 12,000 Units = $ 1596,200 + $ 319,240=
$ 1915,440
<em>Sales must be $ 1975,440 to earn a profit of $ 60,000</em>
<em>Each unit must be sold for at least $ 1975,440/12000= $ 164.62 or </em>
<em>$ 165 to earn a profit of $ 60,000</em>
