W. W. Phillips Company produced 4,000 leather recliners during the year. These recliners sell for $400 each. Phillips had 500 recliners in finished goods inventory at the beginning of the year. At the end of the year, there were 700 recliners in finished goods inventory. Phillips' accounting records provide the following information:
Purchases of raw materials ........................................$320,000
Beginning materials inventory .......................................46,800
Ending materials inventory ..........................................66,800
Direct labor ...........................................................200,000
Indirect labor ..........................................................40,000
Rent, factory building ................................................42,000
Depreciation, factory equipment ....................................60,000
Utilities, factory .......................................................11,900
Salary, sales supervisor ...............................................90,000
Commissions, salespersons .........................................180,000
General administration ..............................................300,000
Beginning work-in-process inventory ..............................13,040
Ending work-in-process inventory ..................................14,940
Beginning finished goods inventory ................................80,000
Ending finished goods inventory ..................................114,100
Required:
1. Prepare a statement of cost of goods manufactured.
2. Compute the average cost of producing one unit of product in the year.
3. Prepare an income statement for external users.