Total Manufacturing Cost, Income Statement, Unit Cost, and Selling Price
You are consulted by Investors, Inc., a group of investors planning a new product. They have estimates of the costs of materials, labor, overhead, and other expenses for the year but need to know how much to charge for each unit to earn a profit during the year equal to of their estimated investment of $ignore income taxes
Their plans indicate that each unit of the new product requires the following:
Direct Material lb of a material costing $ per lb
Direct labor hrs of adie cutter'stime at $ per hr
hrs of an assembler's time at $ per hr
Major items of production overhead would be annual rent of $ on the factory building and $ on machinery as well as indirect material of $ Other production overhead is an estimated of total direct labor costs. Selling expenses are an estimated of total sales, and nonfactory administrative expenses are of total sales.
The consensus at Investors is that during the year units of product should be produced for selling and another units should be produced for the next year's beginning inventory. Also, an extra pounds of material will be purchased as beginning inventory for the next year. Because of the nature of the manufacturing process, all units started must be completed, so work in process inventories are negligible.
Required
a Incorporate the above data into a schedule of estimated total manufacturing costs and compute the unit production cost for the year.
Do not use negative signs with any of your answers.
Estimated Total Manufacturing Cost
For the Year Ended December
Direct material:
Beginning materials inventory Answer
Answer
Answer
Cost of material available Answer
Less: Answer
Answer
Total materials used Answer
Less: Answer
Answer
Direct materials used Answer
Direct labor Answer
Manufacturing overhead
Indirect material Answer
Building rent Answer
Machinery rent Answer
Answer
Answer
Total manufacturing overhead Answer
Total manufacturing costs Answer
Round answer to two decimal places.
Product cost per unit Answer
b Prepare an estimated income statement that would provide the target amount of profit for the year.
Income Statement
For the Year Ended December
Answer
Answer
Answer
Answer
Gross profit on sales Answer
Operating expenses:
Answer
Answer
Answer
Answer
Answer
Answer
Answer
c What unit sales price should Investors charge for the new product?
$Answer
