Information for Gifford, Inc., as of December 31 follows: Administrative salaries $ 35,000 Depreciation of factory equipment 25,000 Depreciation of salespeople’s vehicles 6,000 Direct labor 68,000 Factory supplies used 9,000 Finished goods inventory, January 1 57,000 Finished goods inventory, December 31 ? Factory insurance 15,500 Interest expense 12,000 Factory utilities 14,000 Factory maintenance 7,500 Raw materials inventory, January 1 5,000 Raw materials inventory, December 31 4,000 Raw material purchases 125,000 Rent on factory building 28,000 Repairs of factory equipment 11,500 Sales commissions 37,500 Goods in process inventory, January 1 3,500 Goods in process inventory, December 31 2,700 Cost of goods sold 325,000 Using the Excel template sheet Prepare a manufacturing statement IN GOOD FORM with proper headings for the year ended December 31. Compute the amount of ending finished goods inventory (show all work)
Cost-Volume-Profit Analysis
Cost Volume Profit (CVP) analysis is a cost accounting method that analyses the effect of fluctuating cost and volume on the operating profit. Also known as break-even analysis, CVP determines the break-even point for varying volumes of sales and cost structures. This information helps the managers make economic decisions on a short-term basis. CVP analysis is based on many assumptions. Sales price, variable costs, and fixed costs per unit are assumed to be constant. The analysis also assumes that all units produced are sold and costs get impacted due to changes in activities. All costs incurred by the company like administrative, manufacturing, and selling costs are identified as either fixed or variable.
Marginal Costing
Marginal cost is defined as the change in the total cost which takes place when one additional unit of a product is manufactured. The marginal cost is influenced only by the variations which generally occur in the variable costs because the fixed costs remain the same irrespective of the output produced. The concept of marginal cost is used for product pricing when the customers want the lowest possible price for a certain number of orders. There is no accounting entry for marginal cost and it is only used by the management for taking effective decisions.
Information for Gifford, Inc., as of December 31 follows:
|
Administrative salaries |
$ 35,000 |
|
|
25,000 |
|
Depreciation of salespeople’s vehicles |
6,000 |
|
Direct labor |
68,000 |
|
Factory supplies used |
9,000 |
|
Finished goods inventory, January 1 |
57,000 |
|
Finished goods inventory, December 31 |
? |
|
Factory insurance |
15,500 |
|
Interest expense |
12,000 |
|
Factory utilities |
14,000 |
|
Factory maintenance |
7,500 |
|
Raw materials inventory, January 1 |
5,000 |
|
Raw materials inventory, December 31 |
4,000 |
|
Raw material purchases |
125,000 |
|
Rent on factory building |
28,000 |
|
Repairs of factory equipment |
11,500 |
|
Sales commissions |
37,500 |
|
Goods in process inventory, January 1 |
3,500 |
|
Goods in process inventory, December 31 |
2,700 |
|
Cost of goods sold |
325,000 |
|
|
|
|
|
|
Using the Excel template sheet Prepare a manufacturing statement IN GOOD FORM with proper headings for the year ended December 31.
Compute the amount of ending finished goods inventory (show all work)
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