Precious Products Ltd. Income Statement For the year ended xxxx Sales.................................................................... $______ Cost of goods sold: Finished goods inventory, beginning.................... $ ______ Add: Cost of goods manufactured ....................... ______ Goods available for sale...................................... ______ Deduct: Finished goods inventory, ending............ ______ ______ Gross margin........................................................ ______ Selling and administrative expenses: Selling expenses................................................. ______ Administrative expenses ..................................... ______ ______ Operating income ................................................. $ , .
Precious Products Ltd.
Income Statement
For the year ended xxxx
Sales.................................................................... $______
Cost of goods sold:
Finished goods inventory, beginning.................... $ ______
Add: Cost of goods manufactured ....................... ______
Goods available for sale...................................... ______
Deduct: Finished goods inventory, ending............ ______ ______
Gross margin........................................................ ______
Selling and administrative expenses:
Selling expenses................................................. ______
Administrative expenses ..................................... ______ ______
Operating income ................................................. $ , .
3. Direct labour: $______÷ 10,000 units = $______per unit.
Insurance: $______÷ 10,000 units = $______per unit.
4. Direct materials:
Unit cost: $: $______÷ 10,000 units = $______per unit.
Total cost: ______units × $______ per unit = $______.
Insurance:
Unit cost: $______÷ 12,000 units = $______per unit.
Total cost: $______ (unchanged)
5. Unit cost for insurance dropped from $___ to $____, because of the increase in
production between the two years. Since fixed costs do not change in total as the
activity level changes, they will decrease on a unit basis as the activity level rises.
6. If the company produced 20,000 units then the following costs would appear in inventory: (hint, how many units would be in ending inventory?)
Direct materials ($______/20,000)*4,000 units = $______
Direct labour ($______/20,000)* 4,000 units = ______
Manufacturing overhead ($________/20,000) * ______units = ______
Total $______
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