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Total Manufacturing Cost, Income Statement, Unit Cost, and Selling Price Two inventors, recently organized as Innovation, Inc., consult you regarding a planned new product.They have
Total Manufacturing Cost, Income Statement, Unit Cost, and Selling Price
Two inventors, recently organized as Innovation, Inc., consult you regarding a planned new product.They have estimates of the costs of materials, labor, overhead, and other expenses for but need to know how much to charge for each unit to earn a profit in equal to of their estimated total longterm investment of $ignore income taxes
Their plans indicate that each unit of the new product requires the following:
Direct Material lb of a material costing $ per lb
Direct labor hrs of a metal former's time at $ per hr
hr of an assembler's time at $ per hr
Major items of production overhead would be annual rent of $ for a factory building, $ rent for machinery, and $ of indirect material. Other production overhead is estimated to be $ Selling expenses are an estimated of total sales, and nonfactory administrative expenses are of total sales.
The consensus at Innovation is that during units of product should be produced for selling and another units should be produced for the next year's beginning inventory. Also, an extra pounds of material will be purchased as beginning inventory for the next year. Because of the nature of the manufacturing process, all units started must be completed, so work in process inventories are negligible.
Required
a Incorporate the above data into a schedule of estimated total manufacturing costs and compute the unit production cost for
Do not use negative signs with any of your answers.
Estimated Total Manufacturing Cost
For the Year Ended December
Direct material:
Beginning materials inventory
Cost of material available
Less:
Total materials used
Less:
Direct materials used
Direct labor
Manufacturing overhead
Indirect material
Building rent
Machinery rent
Total manufacturing overhead
Total manufacturing costs
Round answer to two decimal places.
Product cost per unit
b Prepare an estimated income statement that would provide the target amount of profit for
Income Statement
For the Year Ended December
Gross profit on sales
Operating expenses:
c What unit sales price should Innovation charge for the new product?
$
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