Various cost and sales data for Meriwell Company for the just completed year follow:

Required:
1. Prepare a schedule of cost of goods manufactured.
2. Prepare an income statement.
3. The company produced the equivalent of 10,000 units of product during the year just completed.
What was the average cost per unit for direct materials? What was the average cost per unit for factory depreciation?
4. The company expects to produce 15,000 units of product during the coming year. What average cost per unit and what total cost would you expect the company to incur for direct materials at this level of activity? For factory depreciation? (In preparing your answer, assume that direct materials is a variable cost and that depreciation is a fixed cost; also assume that depreciation is computed on a straight-line basis.)
5. Explain to the president any difference in the average cost per unit between (3) and (4) above.

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File Edit View Insert Format Tools Data Window Help X * En 5129 100% Arial D22 12 $% A B Finished goods inventory, beginning $20,000 2 Finished goods inventory, ending $40,000 3 Depreciation, factory 4 Administrative expenses 5 Utilities, factory 6 Maintenance, factory 7 Supplies, factory $27,000 $110,000 $8,000 $40,000 $11,000 8 Insurance, factory $4,000 9 Purchases of raw materials $125,000 10 Raw materials inventory, beginning $9,000 11 Raw materials inventory, ending $6,000 12 Direct labor $70,000 13 Indirect labor $15,000 14 Work in process inventory, beginning $17,000 15 Work in process inventory, ending $30,000 16 Sales 17 Selling expenses 18 10 $500,000 $80,000 Sheet1 Sheet2 Sheet3/