Raw material inventory January 1 88,000

Finished goods inventory, January 1 100,000

Material Purchases 1200,000

Raw material inventory, December 31 120,000

Legal expenses 42,000

Direct labor 480,000

Indirect labor 240,000

Depreciation-Factory building 80,000

Postage expenses 465

Depreciation-Office building (50% to office) 60,000

Supplies and Indirect material used 160,000

Power, Heat, Light 3,000

Factory managers salary 7400

Advertising 2450

Fire insurance 800

Miscellaneous Manufacturing cost 900

Work in Process, January 1 160,000

Work In Process, December 31 192,000

Finished goods inventory, December 31 72,000

Factory overhead is applied at the rate of 125% of direct labor cost ?

During the year 4080 units were manufactured of which 4000 units were sold at a unit price of Rs. 730 each.

Other expenses for the year were: Selling expenses 5% of sales Administrative expenses 2%of sale

i) Assume that the company manufactured 5000 units during the year. What was the unit cost of direct material? ii) Comment on the results you obtained in part 1 in terms of how they affect the possible sales price.