Creative Products Inc incurred the following costs (in alphabetical order) during 2012 related to one of its products: Administrative costs $ 2,000 Advertising costs 1,000 Direct material used 8,000 Direct labor 20,000 Factory equipment depreciation
1,000 Factory rent 5,000 Indirect labor 3,000 Indirect materials 2,000 During the year, 3,000 units were produced out of which 2,750 units were sold for $30 each. Required: A. Calculate the total product costs incurred for the year. B. What is the product cost per unit? C. What is cost of goods sold for the year? D. What is net operating income for the year? (Ignore taxes)
A. Total product costs = $39,000 = $(8,000 + 20,000 + 5,000 + 3,000 + 2,000 + 1,000)
B. Product cost per unit = $13.00 = ($39,000 / 3,000 units)
C. Cost of goods sold = $35,750 = (2,750 units x $13)
D. Net operating income = 43,750 = [($30 x 2,750 units) - 35,750 - 2,000 - 1,000)
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What will be an ideal response?