Outdoor Equipment Company (OEC) and Mountain Supplies Inc. (MSI) sell tents. OEC purchases its tents from a manufacturer for $90 each and sells them for $120. It purchased 10,000 tents in 2006.

MSI produces its own tents. In 2006 MSI produced 10,000 tents. Costs were

Assume that MSI had no beginning inventory of direct materials. There was no beginning inventory of finished tents, but ending inventory consisted of 1,000 finished tents. Ending work-in-process inventory was negligible.
Each company sold 9,000 tents for $1,080,000 in 2006 and incurred the following selling and administrative costs:

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Direct materials purchased Direct materials used $ 535,000 $520,000 260,000 Direct labour Factory overhead: Amortization $40,000 Indirect labour 50,000 Other 30,000 120,000 Total cost of production $900,000