Reference no: EM133042281

Problem - The following information pertains to the most recent quarter at Precious Production Limited.

Purchases of raw materials	$385,500
Raw materials inventory, beginning	46,800
Raw materials inventory, ending	76,500
Depreciation, factory	210,500
Insurance, factory	21,700
Direct labour	251,900
Maintenance, factory	126,800
Administrative expenses	293,600
Sales	2,208,000
Utilities, factory	116,500
Supplies, factory	4,170
Selling expenses	335,300
Indirect labour	271,900
Work in process inventory, beginning	28,850
Work in process inventory, ending	123,400
Finished goods inventory, beginning	42,550
Finished goods inventory, ending	170,200

Required -

1. Prepare a schedule of cost of goods manufactured.

2. Prepare an income statement.

3. Assume that the company produced the equivalent of 16,000 units of product during the year. What was the average cost per unit for direct labour? What was the average cost per unit for factory insurance?

4. Assume that the company expects to produce 18,000 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 factory insurance? (In preparing your answer, assume that direct materials is a variable cost and that depreciation is a fixed cost; also assume that depreciation is computed on a straight- line basis.)

6. Assuming the company produced 24,000 fully and partially finished units during the year, determine the cost components of the finished goods inventory, which is composed of 4,800 finished units.