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Cost of raw materials

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Reference no: EM13535012

In table, which shows Company X's operating profit performance and summary of manufacturing activity for the year, it is assumed that there were no wasteful manufacturing costs. In this question, assume, instead, that the business had to throw away $1,200,000 of unusable raw materials. How should the $1,200,000 cost of raw materials that were thrown out be presented in the operating profit report and summary of manufacturing activity?

	Company X
	Per Unit	Totals
Operating Profit Report for Year
Sales volume, in Units		110,000
Sales Revenue	$1,400.00	$154,000,000
Cost of Goods Sold Expense (see below)	-760	-83,600,000
Gross Margin	$640.00	$70,400,000
Variable Operating Expenses	-300	-33,000,000
Contribution Margin	$340.00	$37,400,000
Fixed Operating Expenses		-21,450,000
Operating Profit		$15,950,000
Manufacturing Activity Summary for Year	Per Unit	Totals
Annual Production Capacity, in Units		150,000
Actual Output, in Units		120,000
Raw Materials	$215.00	$25,800,000
Direct Labor	125	15,000,000
Variable Manufacturing Overhead Costs	70	8,400,000
Total Variable Manufacturing Costs	$410.00	$49,200,000
Fixed Manufacturing Overhead Costs	350	42,000,000
Product Cost and Total Manufacturing Costs	$760.00	$91,200,000

Reference no: EM13535012

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Cost of raw materials

Reference no: EM13535012

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