PROBLEM 16.7A

The accounting records of Idaho Paper Company include the following information relating to the current year.

Dec. 31 Jan. 1

Materials inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $20,000 $25,000

Work in process inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37,500 40,000

Finished goods inventory, Jan. 1 (10,000 units @ $21 per unit) . . . . . . . ? 210,000

Purchases of direct materials during year . . . . . . . . . . . . . . . . . . . . . . . . . . 330,000

Direct labor costs assigned to production . . . . . . . . . . . . . . . . . . . . . . . . . 375,000

Manufacturing overhead . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 637,500

The company manufactures a single product; during the current year, 45,000 units were manufactured and 40,000 units were sold.

Instructions

a. Prepare a schedule of the cost of finished goods manufactured for the current year. (Show a supporting computation of the cost of direct materials used during the year.)

b. Compute the average per-unit cost of production during the current year.

c. Compute the cost of goods sold during the year, assuming that the FIFO (first-in, first-out) method of inventory costing is used.

d. Compute the cost of the inventory of finished goods at December 31 of the current year, assuming that the FIFO (first-in, first-out) method of inventory costing is used.