Problem
Scranton Refrigeration Corporation began operations at the beginning of the current year. One of the company's products, a compressor, sells for $185 per unit. Information related to the current year's activities follows.
Variable costs per unit:
Direct material $ 10
Direct labor 35
Manufacturing overhead 46
Annual fixed costs:
Manufacturing overhead 600,000
Selling and administrative 860,000
Sales and Production activity:
Sales (units) 20,000
Production (units) 24,000
Scranton Refrigeration carries its finished-goods inventory at the average unit cost of production and is subject to a 30% income tax rate. There was no work in process at year-end.
1. Determine the cost of the December 31 finished-goods inventory.
2. Compute Scranton Refrigeration's net income for the current year ended December 31.