Wachman Inc. manufactures mugs decorated with the likenesses of famous cartoon char¬ acters. Last year 200,000 mugs were made and 207,000 were sold for $5 each. The actual unit cost for a mug is as follows.

The selling expenses consisted of a commission of $0.25 per unit sold and advertising co¬
payments totaling $25,000. Administrative expenses, all fixed, equaled $50,000. There were no beginning and ending work in process inventories. Beginning finished goods inventory was $40,500 for 10,000 mugs.
Required:
1. Calculate the number of mugs and the value of ending finished goods inventory.
2. Prepare a cost of goods sold statement.
3. Prepare an absorption-costing income statement

Transcribed Image Text:

Direct materials $0.50 Direct labor 1.20 Variable overhead 0.75 Fixed overhead 1.60 Total unit cost $4.05