Carlton Manufacturing Company provided the following details

Carlton Manufacturing Company provided the following details about operations in February:

Raw materials used in production cost $177,480, total overhead costs for the year were $207,440, the goods available for sale totalled $408,000, and the cost of goods sold totalled $353,500.

          

Prepare a schedule cost of goods sold section of the company’s income statement for the year.

          

Assume that the dollar amounts given above are for the equivalent of 17,400 units produced during the year. Compute the average cost per unit for direct materials used, and compute the average cost per unit for rent on the factory building. (Round your answers to 2 decimal places.)

          

Assume that in the following year the company expects to produce 22,400 units. What average cost per unit and total cost would you expect to be incurred for direct materials, and for rent on the factory building? Direct materials are a variable cost and rent is a fixed cost. (Round \"Unit cost\" answers to 2 decimal places.)

          

Solution

Answer 1-a. Statement of Cost of Goods Manufactured Direct Material Raw Material Inventory, Beginning            37,000.00 Material Purchased         166,000.00 Total Direct Material Available for Prouction         203,000.00 Raw Material Inventory, Ending ($203,000 - $177,480)         (25,520.00) Cost of Direct Materials Used in Productions     177,480.00 Direct Labor        34,900.00 Factory Overhead Maintenance, Factory            40,600.00 Depreciation, Factory Equipment            59,800.00 Indirect Materials, Factory              3,600.00 Utilities Factory            28,400.00 Insurance, Factory Equipment              4,600.00 Rent, Factory Building - $207,440 - $137,000            70,440.00 Total Factory Overheads     207,440.00 Total Manufacturing Costs     419,820.00 Add: WIP Inventory, Beginning        28,800.00 Sub-total     448,620.00 Less: WIP Inventory, Ending - $448,620 - $387,000     (61,620.00) Cost of Goods Manufactured     387,000.00 Answer 1-b. Statement of Cost of Goods Sold Finished Goods Inventory, Beginning            21,000.00 Cost of Goods Manufactured - $408,000 - $21,000         387,000.00 Cost of Goods Available for Sale         408,000.00 Less: Finished Goods Inventory, Ending - $408,000 - $353,500         (54,500.00) Cost of Goods Sold         353,500.00 Answer 2. Average Cost per unit of Direct Materials = $177,480 (Total Direct Material) / 17,400 Units Average Cost per unit of Direct Materials = $10.20 per unit Average Cost per Unit - Rent, Factory Building = $70,440 (Factory Rent) / 17,400 Units Average Cost per Unit - Rent, Factory Building = $4.05 per unit (approx.) Answer 3. Average Cost per unit of Direct Materials = $10.20 per unit Total Cost - Direct Materials = $10.20 X 22,400 Units Total Cost - Direct Materials = $228,480 Average Cost per Unit - Rent, Factory Building = $70,440 (Factory Rent) / 22,400 Units Average Cost per Unit - Rent, Factory Building = $3.14 per unit