Reference no: EM131775032

Let's try one "numbers" exercise to test our knowledge of the basic accounting terms.

Given that, 
sales = 12,500 units during the year
Cost of good sold = $250,000
Beginning inventory of finished goods = $87,000
Cost of goods manufactured = $241,000
Gross profit ratio = 60% of sales
Direct materials used = $122,000
Direct labor cost = $74,000
Manufacturing overhead cost = $40,000
Beginning Work-in-process = $55,000
Selling and general admin cost = $310,000

The company is subject to a 30% income tax rate.

Based on the above information, answer the following questions. You can answer all, or just a few at a time and leave the rest for your classmates.

1. What was the selling price per unit?
2. Based on your analysis of the cost of goods sold for the year, can you tell if management was able to reduce its investment in finished goods inventory over the year? Explain with computation. [The Schedule of Cost of Goods Sold on page 88 of your textbook may help]
3. Based on your analysis of the firm's manufacturing costs during the year, can you tell if management was able to reduce its investment in work-in-process inventory over the year? Explain with computation. [The Schedule of Cost of Goods Manufactured on page 88 of your textbook may help]
4. The company wanted to maintain a net income margin of at least 7% on its sales during the year. Did management succeed in doing that? Explain with computation.