Problem - Selected account balances for the year ended May 31, 20x1 are provided below for Super Dmart:
Raw materials inventory, June 1, 20x0 $ 40,000
Raw materials inventory, May 31, 20x1 30,000
Purchases of raw materials 150,000
Insurance, factory 12,000
Work in process, June 1, 20x0 ?
Utilities, factory 25,000
Indirect labour 60,000
Finished goods inventory, June 1, 20x0 85,000
Direct labour ?
Indirect materials 30,000
Work in process, May 31, 20x1 48,000
Rent, factory building 120,000
Finished goods inventory, May 31, 20x1 ?
Maintenance, factory 16,000
The goods available for sale for the year totaled $635,000, the total manufacturing costs were $563,000, and the cost of goods sold totaled $560,000 for the year.
Required:
1. Prepare a schedule of cost goods manufactured in the form illustrated in Exhibit 2-9 in the textbook and a schedule of cost goods sold.
2. Assume that the dollar amounts given above are for the equivalent of 40,000 units produced during the year. Calculate the unit cost for direct materials. Calculate the unit cost for rent on the factory building.
3. Assume in 20x2 that the company produces 50,000 units. What would be the per unit and total cost that you would expect to be incurred for direct materials? For rent on the factory building?
4. As the manager in charge of production costs, explain to the president the reason for any difference in unit costs between (2) and (3) above.