Data P2-1
Various cost and sales data for Meriwell Company for the just completed year appear in the worksheet below.
MERIWELL COMPANY
Finished goods inventory, beginning	$20,000
Finished goods inventory, ending	40,000
Depreciation, factory	27,000
Administrative expenses	110,000
Utilities, factory	8,000
Maintenance, factory	40,000
Supplies, factory	11,000
Insurance, factory	4,000
Purchase of raw materials	125,000
Raw materials inventory, beginning	9,000
Raw materials inventory, ending	6,000
Direct labor	70,000
Indirect labor	15,000
Work in process inventory, beginning	17,000
Work in process inventory, ending	30,000
Sales	500,000
Selling Expenses	80,000
Required
1. Assume that 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?
2. Assume that 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? Assume that depreciation is computed on a straight-line basis.