Calculate direct materials inventory

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Reference no: EM132800722

Question - Variable manufacturing costs are variable with respect to units produced. Variable marketing, distribution, and customer-service costs are variable with respect to units sold:

Inventory data are:

Beginning January 1, 2007 Ending December 31, 2007

Direct materials 0 lb. 2,000 lbs.

Work in process 0 units 0 units

Finished goods 0 units ? Units

Production in 2007 was 100,000 units. Two pounds of direct materials are used to make one unit of finished product.

Revenues in 2007 were P436,800. The selling price per unit and the purchase price per pound of direct materials were stable throughout the year. The company's ending inventory of finished goods is carried at the average unit manufacturing costs for 2007. Finished-goods inventory at December 31, 2007, was P20,970.

Required -

1. Calculate direct materials inventory, total cost, December 31, 2007.

2. Calculate finished-goods inventory, total units, December 31, 2007.

3. Calculate selling price in 2007.

4. Calculate operating income for 2007.

Reference no: EM132800722

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