Pisna, Inc., manufactures dowhats. The manufacturing costs incurred during its f
ID: 2489578 • Letter: P
Question
Pisna, Inc., manufactures dowhats. The manufacturing costs incurred during its first year of operations are as follows: During the year, 100 completed dowhats were manufactured, of which 90 were sold. (Assume that the amount of the ending inventory of finished goods and the cost of goods sold are determined using the average per-unit cost of manufacturing a completed dowhat.) Instructions Compute each of the following and show all computations: The average per-unit cost of manufacturing a completed dowhat during the current year. The year-end balances of the following inventories: materials, work in progress, and finished goods. The cost of goods sold during the year. For the current year, the costs of direct materials purchased, direct labor, and manufacturing overhead total $1,75,000. Is this the amount of manufacturing costs deducted from revenue in the current year? Explain fully.Explanation / Answer
a) 1 Average per unit cost=Cost of finished goods manufactured/no. of dowhats 900000/100 $9,000 per unit 2) Direct Material Inventory=400000-385000 $15,000 Work in process Inventory 385000+350000+425000-900000 260000 Finishes goods Inventory=9000*10 unsold units 90000 3) COGS= 9000*90 units $810,000 Ans b No, $1175000 is not transferred to to income statement and deducted from revenue amount Because it consists of direct material inventory, WIP and Finished goods inventory Only COGS should be deducteed from revenue