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 ................................................. $ , .

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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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 $______

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: $_
Insurance: $
+ 10,000 units = $_
+ 10,000 units = $_
per unit.
per unit.
4. Direct materials:
Unit cost: $: $_
Total cost:
Insurance:
Unit cost: $_
Total cost: $
÷ 10,000 units = $.
Lunits x $_
per unit.
per unit = $_
÷ 12,000 units = $_
(unchanged)
per unit.
5. Unit cost for insurance dropped from $__ to $_, because of the increase in
production between the two years. Since fixed costs do not change in total as the
activity level changes, they will decrease on a unit basis as the activity level rises.
6. If the company produced 20,000 units then the following costs would appear in in-
ventory: (hint, how many units would be in ending inverntory?)
Direct materials ($.
Direct labour ($_
Manufacturing overhead ($.
Total
_/20,000)*4,000 units
/20,000)* 4,000 units
/20,000) *
units
||
Il||
Transcribed Image Text: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: $_ Insurance: $ + 10,000 units = $_ + 10,000 units = $_ per unit. per unit. 4. Direct materials: Unit cost: $: $_ Total cost: Insurance: Unit cost: $_ Total cost: $ ÷ 10,000 units = $. Lunits x $_ per unit. per unit = $_ ÷ 12,000 units = $_ (unchanged) per unit. 5. Unit cost for insurance dropped from $__ to $_, because of the increase in production between the two years. Since fixed costs do not change in total as the activity level changes, they will decrease on a unit basis as the activity level rises. 6. If the company produced 20,000 units then the following costs would appear in in- ventory: (hint, how many units would be in ending inverntory?) Direct materials ($. Direct labour ($_ Manufacturing overhead ($. Total _/20,000)*4,000 units /20,000)* 4,000 units /20,000) * units || Il||
The following information pertains to the most recent quarter at Precious Production Limited.
Purchases of raw materials
$ 360,000
Raw materials inventory, beginning
40,000
Raw materials inventory, ending
68,000
Depreciation, factory
168,000
Insurance, factory
20,000
Direct labour
240,000
Maintenance, factory
120,000
Administrative expenses
280,000
Sales
1,800,000
Utilities, factory
108,000
Supplies, factory
4,000
Selling expenses
320,000
Indirect labour
260,000
Work in process inventory, beginning
28,000
Work in process inventory, ending
120,000
Finished goods inventory, beginning
40,000
Finished goods inventory, ending
160,000
Transcribed Image Text:The following information pertains to the most recent quarter at Precious Production Limited. Purchases of raw materials $ 360,000 Raw materials inventory, beginning 40,000 Raw materials inventory, ending 68,000 Depreciation, factory 168,000 Insurance, factory 20,000 Direct labour 240,000 Maintenance, factory 120,000 Administrative expenses 280,000 Sales 1,800,000 Utilities, factory 108,000 Supplies, factory 4,000 Selling expenses 320,000 Indirect labour 260,000 Work in process inventory, beginning 28,000 Work in process inventory, ending 120,000 Finished goods inventory, beginning 40,000 Finished goods inventory, ending 160,000
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