Foxwood Company is a metal- and wood-cutting manufacturer selling products to the home 1. Operating income $120,000 construction market. Consider the following data for the year 2009:

REQUIRED 1. Prepare an income statement with a separate supporting schedule of cost of goods manufactured.
For all manufacturing items, indicate by V or F whether each is basically a variable cost or a fixed cost (where the cost object is a product unit). If in doubt, decide on the basis of whether the total cost will change substantially over a wide range of production output.
2. Suppose that both the direct materials and plant leasing costs are tied to the production of 900,000 units. What is the direct materials cost assigned to each output unit produced?
Assume that the plant leasing costs are a fixed cost. What is the unit cost of the plant leasing costs?
3. Repeat the computation in requirement 2 for direct materials and plant leasing costs assuming that the costs are being predicted for the manufacturing of 1 million units next year. Assume no changes in the historical or actual cost behaviour patterns.
4. As a management consultant, explain concisely to the president why the direct materials cost per output unit did not change in requirements 2 and 3 but the plant leasing costs per output unit did change.
5. Calculate what direct manufacturing labour (DML) cost is as a percentage of total cost of goods sold (COGS). In your opinion is this a material cost? Provide your reason(s).
Consistent with your opinion, would you classify DML as a prime or a conversion cost?LO1

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Sandpaper $ 2,000 Materials-handling costs 70,000 Lubricants-handling costs 5,000 Miscellaneous indirect manufacturing labour 40,000 Direct manufacturing labour 300,000 Direct materials, January 1, 2009 40,000 Direct materials, December 31, 2009 50,000 Finished goods January 1, 2009 100,000 Finished goods December 31, 2009 150,000 Work in process, January 1, 2009 10,000 Work in process, December 31, 2009 14,000 Plant leasing costs 54,000 Amortization-plant equipment 36,000 Property taxes on plant equipment 4,000 Fire and casualty insurance on plant equipment 3,000 Direct materials purchased in 2009 460,000 Revenue 1,360,000 Marketing and promotion 60,000 Marketing salaries Shipping costs Customer service costs 100,000 70,000 100,000