The following are data regarding last year's production of Baby Buddy, one of the major products of Toledo Toy Company.
Purchases of direct material......$332,000
Direct materials used............... 333,600
Direct labor payrolls.................176,700
Direct labor costs production.......180,000
Manufacturing overhead.............288,000
During the year, 60,000 units of this product were manufactured and 62,100 units were sold. Selected information concerning inventories during the year follows:
End of Year Beginning of Year
Materials........................... ? $12,800
Work in Process.................... 4,700 4,100
Finished goods Jan. 1 (3,000 units @$13) ? 39,000
Instructions
a) Prepare a schedule of the cost of finished goods manufactured for the Baby Buddy product.
b) Compute the average costs of Baby Buddy per finished unit.
c) Compute the cost of goods sold associated with the sale of Baby Buddy. Assume that there is a first-in, first-out (FIFO) flow through the Finished Goods Inventory account and that all units completed during the year are assigned the per-unit costs determined in part b.
d) Compute the amount of inventory relating to Baby Buddy that will be listed in the company's balance sheet at Dec. 31. Show supporting computations for the year-end amounts of materials inventory and finished goods inventory.
e) Explain how the $180,000 in direct labor costs assigned to production affect the company's income statement and balance sheet.