Direct Materials$3.00 per unit

MOD$2.00 per unit

Manufacturing supplies $0.40 per unit

Delivery costs$ 0.15 per unit

Seller Commissions$ 0.75 per unit

Fixed costs:

Depreciation of Machinery and Equipment$8,000

Plant Supervision$5,000

Plant Manager$10,000

Plant Insurance$2,000

Administration and Sales Expenses$8,000

There were no inventories at the beginning of the period, but at the end of the period, there are 1,200 units of FILCAR in the finished products warehouse, ready for sale.

The unit sales price of FILCAR is $9.50

It is requested:

1.What will be the profit and value of the ending inventory if:

a.10 thousand units would have been manufactured

b.12 thousand units would have been manufactured

c.14 thousand units would have been manufactured

2.Why do manufacturing costs vary in 1a, 1b, and 1c?

3.Do you agree that the cost of inventory should be higher in 1a than in 1b and 1c?