Armidale Innovations produces and sells laptops. For 2016, Armidale Innovations

ID: 2573250 • Letter: A

Question

Armidale Innovations produces and sells laptops. For 2016, Armidale Innovations recorded a total of $20,007,000 of manufacturing costs and it produced 407,000 completed units. At the end of the year, the books revealed that the company’s completed units (finished goods) closing inventory for the year stood at 37,000 units, while a total of 377,000 units were sold during the year. Required: Work out the following, showing all supporting calculations/working: a.For 2016, how much did it cost Armidale Innovations to produce one unit (round to 2 decimal places)? b.How much cost of goods sold did Armidale Innovations report for 2016? c.How much cost of finished goods ending inventory did Armidale Innovations report for 2016?

Explanation / Answer

Solution:

Total Manufacturing Cost (A)

$20,007,000

Total Units Produced (B)

407,000

Units

The cost Armidale Innovations to produce one unit (A/B)

$49.16

Per Unit

Cost of Goods Sold = Units Sold during the year x Cost to Produce one unit

= 377,000 Units Sold x $49.16 as per part a

= $18,533,320

Cost of Ending Inventory = Ending Inventory Units x Cost to Produce One Unit

= 37,000 Units x $49.16

= $1,818,920

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