38) Account Record of Loan Oak Products:
Raw materials purchases $175,000
Direct labor 254,000
Indirect labor 109,000
Selling and administrative salaries 133,000
Building depreciation* 80,000
Selling & admin expense 195,000
Other factory cost 344,000
Sales revenue ($130 per unit) 1,495,000
; Seventy-five percent of the company’s building was devoted to production activities; the
remaining 25 percent was used for selling and administrative functions.
Inventory data: January 1 December 31
Raw material 15,800 18,200
Work in progress 35,700 62,100
Finish goods* 111,100 97,900
; The January 1 and December 31 inventory consisted of 1,350 units and 1,190 units, respectively
1. Calculate Lone Oak’s manufacturing overhead for the year.
2. Calculate Lone Oak’s cost of goods manufactured.
3. Compute the company’s cost of goods sold.
4. Determine net income for 20x1, assuming a 30% income tax rate.
5. Determine the number of completed units manufactured during the year.
6. Build a spreadsheet : Construct an Excel spreadsheet to solve all of the preceding requirements.
Show how the solution will change if the following data change: indirect labor is $115,000 and
othe factory cost amount to $516,000.
40. Mason Corp began operations at the beginning of the current year. One of the company’s
product, a refrigeration element, sells for $185 per unit. Information related to the current
year’s activities follows:
Variable costs per unit:
Direct material $20
Direct Labor $37
Manufacturing overhead 48
Annual Fixed costs:
Manufacturing overhead 600,000
Selling and administrative 860,000
Production and Sales activity;
Production (units) 24,000
Mason carries its finished-goods inventory at the average unit cost of production and is subject
ot 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. Computer Mason’s net income for the current year ended December 31.
3. If next year’s production decreases to 23,000 units and general cost behavior patterns do
not change, what is the likely effect on:
a. The direct-labor cost of $37 per unit? Why?
b. The fixed manufacturing overhead costs of $600,000? Why?
c. The fixed selling and administrative cost of $860,000? Why?
d. The average unit cost of production? Why?
41. Determine the missing amounts in each of the following independent cases. Refer to the
spreadsheet, fill in the spreadsheet.