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ID: 2415038 • Letter: #
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The following information is available for Dunworth Canoes, a company that builds inexpensive aluminum canoes:2014 2015 Total Units produced 20,630 14,370 35,000 Units sold 17,500 17,500 35,000 Selling price per unit $600 $600 Variable production costs per unit $196.00 $196.00 Direct material per unit $87 $87 Direct labor per unit $44 $44 Variable manufacturing overhead per unit $65 $65 Fixed manufacturing overhead per year $701,420 $701,420 Fixed selling and administrative expense per year $193,900 $193,900
In its first year of operation, the company produced 20,630 units but was able to sell only 17,500 units. In its second year, the company needed to get rid of excess inventory (the extra 3,130 units produced but not sold in 2014) so it cut back production to 14,370 units.
Explanation / Answer
Solution:
2014 Units sold 17500 selling price per unit 600 Sales 10500000 units produced 20630 Manufacturing cost per unit 230 cost of goods manufactured 4744900 ending inventory (3130*230) 719900 Cost of goods sold 4025000 gross profit 6475000 Fixed selling and administrative expenses per year 193900 Net profit 6281100 2015 Units sold 17500 selling price per unit 600 Sales 10500000 Beginning inventory(3130*244.81) 766255.3 Units produced 14370 Manufacturing cost per unit 244.81 Cost of goods manufactured 3517920 Cost of goods sold 4284175 gross profit 6215825 fixed selling and administrative expense per year 193900 net profit 6021925 Working note : Production cost per unit in 2014 = 196+701420/20630 production cost per unit in 2015 = 196+ 701420/14370Related Questions
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