Reference no: EM132088163

Question - Various cost and sales data for Meriwell Company for the just completed year appear in the worksheet below:

Finished goods inventory, beginning $20,000

Finished goods inventory, ending $40000

Administrative expenses $110000

Manufacturing overhead $105000

Purchases of raw materials $125000

Raw materials inventory, beginning $9000

Raw materials inventory, ending $6000

Direct labor $70,000

Work in process inventory, beginning $17000

Work in process inventory, ending $30,000

Sales $500000

Selling expenses $80000

Of the $105000of manufacturing overhead, $15000 is variable and $90,000 is fixed.

Required:

1. Prepare a schedule of cost of goods manufactured.

2. Prepare an income statement

3. Assume that the company produced the equivalent of 10000 units of product during the year just completed. What was the average cost per unit for fixed manufacturing overhead?

4. Assume that the company expects to produce 15000 units of product during the coming year. What average cost per unit and what total cost would you expect the company to incur for direct materials at this level of activity? For fixed manufacturing overhead? Assume that direct materials is a variable cost.

5. As the manager responsible for production costs, explain to the president any difference n te average cost per unit between (3) and (4) above.