# Basic Concepts_answers.pdf - Question 1 1. If 2 pounds of...

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Basic ConceptsAnswers to Home Exercise1Question 11.If 2 pounds of direct materials are used to make each unit of finished product,100,000 units × 2 lbs., or 200,000 lbs. were used at \$0.70 per pound of directmaterials (\$140,000 ÷ 200,000 lbs.). (The direct material costs of \$140,000 are directmaterials used, not purchased.) Therefore, the ending inventory of direct materials is2,000 lbs.\$0.70 = \$1,400.2.Manufacturing Costs for 100,000 unitsVariableFixedTotalDirect materials costs\$140,000\$\$140,000Direct manufacturing labor costs30,00030,000Plant energy costs5,0005,000Indirect manufacturing labor costs10,00016,00026,000Other indirect manufacturing costs8,00024,00032,000Cost of goods manufactured\$193,000\$40,000\$233,000Average unit manufacturing cost:\$233,000 ÷ 100,000 units= \$2.33 per unitFinished goods inventory in units:=\$20,970(given)\$2.33per unit= 9,000 units3.Units sold in 2014 = Beginning inventory + ProductionEnding inventory= 0 + 100,0009,000 = 91,000 unitsSelling price per unit in 2014 =\$436,800 ÷ 91,000=\$4.80 per unit4.Revenues (91,000 units sold × \$4.80)\$436,800Cost of units sold:Beginning finished goods, Jan. 1, 2014\$0Cost of goods manufactured233,000Cost of goods available for sale233,000Ending finished goods, Dec. 31, 201420,970212,030Gross margin224,770Operating costs:Marketing, distribution, and customer-service costs

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Term
Spring
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direct material costs, pounds of direct materials