6. During its first year of operations, Silverman Company paid $11,625 for direc

Question

6.

During its first year of operations, Silverman Company paid $11,625 for direct materials and $11,000 for production workers' wages. Lease payments and utilities on the production facilities amounted to $10,000 while general, selling, and administrative expenses totaled $3,500. The company produced 7,250 units and sold 4,500 units at a price of $7.00 a unit.

What was Silverman's net income for the first year in operation? (Do not round intermediate calculations.)

a. $21,500

b. $28,000

c. $8,875

d. $7,750

Explanation / Answer

Statement of Net Income for 4500 units Particular Amount Unit Sold(4500*7) $31,500 Less: Direct Material $7,216 Less: Wages $6,828 Less:Utility expenses $6,206 Less: Selling and Admin Expenses $3,500 $7,750 W.N1 Direct Material for 7250 Units= 11625 so for 4500 units=11625*4500/7250 Wn 2 Selling expenses are the expenses incurred on unit sold so it will taken as whose since unit sold are 4500

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