The current information is based on a computer company who sells their devices at $320 per unit. Based on the information provided, the company carries its finished goods inventory at an average cost of production and as of January 1st has no work in progress.
Number of units Produced 12,000
Number of units sold 7,000
Variable cost per unit:
Direct materials $100
Direct Labor 50
Variable manufacturing overhead 30
Annual Fixed costs:
Fixed manufacturing overhead $400,000
Fixed Selling and Administrative costs $300,000
1. Compute the company's average unit cost of production.
2. Determine the cost of the December 31 finished-goods inventory.
3. Compute the company's cost of goods sold.
4. Compute the operating income.