Deuce Company manufactures a small engine. During Year3, Deuce completed 2000 en

Question

Deuce Company manufactures a small engine. During Year3, Deuce completed 2000 engines. Deuce incurred the following costs:

$80000 for cost of materials for the engines

$20000 for the cost of salaries paid to the factory workers

$30000 for the cost of salaries paid to the sales staff

$180000 for rent on the factory

Deuce had no inventory on hand at the beginning of Year3. The company sold 800 engines during Year3. Round your final answers to the nearest dollar, if needed.

a)What will Deuce report as Salary expense on the Year3 income statement?

b)What will Deuce report as inventory on the balance sheet as of the end of Year3?

Explanation / Answer

a) Salary expense on year 3 Income statement = $30000

b) Inventory value on the balance sheet

Inventory on balance sheet = (2000-800)*140 = $168000

Materal 80000 Direct labour 20000 Factory overhead 180000 Total Manufacturing cost 280000 Cost per engine (280000//2000) 140 per engine

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