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Problem
Scranton Refrigeration Corporation began operations at the beginning of the current year. One of the company's products, a compressor, sells for $185 per unit. Information related to the current year's activities follows.
Variable costs per unit: Direct material $ 10 Direct labor 35 Manufacturing overhead 46 Annual fixed costs: Manufacturing overhead 600,000 Selling and administrative 860,000 Sales and Production activity: Sales (units) 20,000 Production (units) 24,000
Scranton Refrigeration carries its finished-goods inventory at the average unit cost of production and is subject to a 30% income tax rate. There was no work in process at year-end.
1. Determine the cost of the December 31 finished-goods inventory.2. Compute Scranton Refrigeration's net income for the current year ended December 31.
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