Problem - ICM manufactures and sells metal shelving. It began operations on January 1, 2002. Costs incurred for 2002 are as follows (V stands for variable; F stands for fixed):
Direct materials costs $140,000 V
Direct manufacturing labour costs 30,000 V
Plant energy costs 5,000 V
Indirect manufacturing labour costs 10,000 V
Indirect manufacturing labour costs 16,000 F
Other indirect manufacturing costs 8,000 V
Other indirect manufacturing costs 24,000 F
Marketing, distribution, and customer - service costs 122,850 V
Marketing, distribution, and customer - service costs 40,000 F
Administrative costs 50,000 F
Variable manufacturing costs are variable with respect to units produced. Variable marketing, distribution and customer-service costs are variable with respect to units sold. Inventory data are:
Beginning Ending
January 1, 2002 December 31, 2002
Direct materials 0 kg 2,000 kg
Work in process 0 units 0 units
Finished goods 0 units ? units
Production in 2002 was 100,000 units. Two kilograms are used to make one unit of finished product. Revenues in 2002 were $436,800. The selling price per unit and the purchase price per kilogram of direct materials were stable throughout the year. The company's ending inventory of finished goods is carried at the average unit manufacturing costs for 2002. Finished goods inventory at December 31, 2002 was $20,970.
Required: (show your calculations)
1. Direct materials inventory, total cost, December 31, 2002.
2. Finished goods inventory, total units, December 31, 2002.
3. Selling price per unit, 2002.
4. Operating income, 2002.