Reference no: EM133046547

Question - Aelan Products Company, a small manufacturer, has submitted the items below concerning last year's operations. The president's secretary, trying to be helpful, has alphabetized the list.

Administrative salaries $4,800

Advertising expense 2,400

Depreciation-factory building 1,600

Depreciation-factory equipment 3,200

Depreciation-office equipment 360

Direct labour cost 43,800

Raw materials inventory, beginning 4,200

Raw materials inventory, ending 6,400

Finished goods inventory, beginning 93,960

Finished goods inventory, ending 88,820

General liability insurance expense 480

Indirect labour cost 23,600

Insurance on factory 2,800

Purchases of raw materials 29,200

Repairs and maintenance of factory 1,800

Sales salaries 4,000

Taxes on factory 900

Travel and entertainment expense 2,820

Work in process inventory, beginning 3,340

Work in process inventory, ending 2,220

Required -

a. Prepare a schedule of Cost of Goods Manufactured in good form for the last year.

b. Determine the Cost of Goods Sold for the last year.

c. The company produced 1,000 units of product during the last year. What was the average cost per unit for direct labour cost? What was the average cost per unit for factory insurance?

d. The company expects to produce 1,200 units of product during this year. What average cost per unit and what total cost would you expect the company to incur for factory insurance at this level of activity? (Assume that factory insurance is a fixed cost).

e. As the manager is responsible for production costs, explain to the manager any difference in the average costs per unit between (c) and (d) above.