Chapter 1 Problems - Solutions
Sugars Company makes candy.
During the most recent accounting period Sugars
paid $5,000 for raw materials, $6,000 for labor, and $3,000 for overhead costs
that were incurred to make candy.
Sugars started and completed 20,000 units of
candy of which 16,000 were sold.
How much product cost did the company incur during the year?
Product Cost = Material + Labor + Manufacturing Overhead
= $5,000 + $6,000 + $3,000
What is the cost per unit?
Cost per Units = Total Product Cost / # of units completed
= $14,000 / 20,000
How much expense did the company recognize on the income statement?
COGS = Cost per unit * # of units sold
= $0.70 * 16,000
Newman industries makes baby diapers.
During the most recent accounting
period, NI paid $90,000 for raw materials, $78,000 for labor, and $82,000 for
overhead costs that were incurred to start and complete 125,000 boxes of diapers.
G,S, & A expenses amounted to $120,000.