PRIME COST, CONVERSION COST, PREPARATION OF INCOME STATEMENT: MANUFACTURING FIRM
Roundabout Shoe Company makes walking shoes. During the past calendar year, a total of 90,000 pairs of shoes were made, and 89,000 were sold for $54.00 per pair. The actual unit cost per pair of shoes is as follows:
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Direct Materials
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$ 13.20
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Direct Labor
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5.80
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Variable Overhead
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3.50
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Fixed overhead
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16.75
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Total unit cost
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$39.25
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The selling expenses consisted of a commission of $2.70 per pair sold and advertising copayments totalling $236,000. Administrative expenses, all fixed, equalled $183,000. There were no beginning and ending work-in-process inventories. Beginning finished goods inventory was $235,500 for 6,000 pairs of shoes.
Required:
1. Calculate the number and the dollar value of walking shoes in ending finished goods inventory.
2. Prepare a cost of goods sold statement.
3. Prepare an absorption-costing income statement.