Atlanta Offce Equipment - Material - COGM - Income statement

Comprehensive problem on unit costs, product costs. Atlanta Office Equipment manufactures andsells metal shelving. It began operations on January 1, 2014. Costs incurred for 2014 are as follows (V standsfor variable; F stands for fixed):

 Direct materials used                                            $149,500

 Direct manufacturing labor costs                           34,500 V

 Plant energy costs                                                  6,000 V

 Indirect manufacturing labor costs                           12,000 V

 Indirect manufacturing labor costs                           17,000 F

 Other indirect manufacturing costs                          7,000 V

 Other indirect manufacturing costs                            27,000 F

 Marketing, distribution, and customer-service costs  126,000 V

 Marketing, distribution, and customer-service costs   47,000 F

 Administrative costs                                                     58,000 F

 Variable manufacturing costs are variable with respect to units produced. Variable marketing, distribution,and customer-service costs are variable with respect to units sold.

 Inventory data are as follows:

                                                Beginning: January 1, 2014             Ending: December 31, 2014

 Direct materials                                       0 lb                                               2,300 lbs 

Work in process                                              0 units                                               0 units

Finished goods                                                  0 units                                             ?units

 Production in 2014 was 115,000 units. Two pounds of direct materials are used to make one unit of finishedproduct.

 Revenues in 2014 were $540,000. The selling price per unit and the purchase price per pound of directmaterials were stable throughout the year. The company’s ending inventory of finished goods is carried atthe average unit manufacturing cost for 2014. Finished-goods inventory at December 31, 2014, was $15,400.

1. Calculate direct materials inventory, total cost, December 31, 2014.

2. Calculate finished-goods inventory, total units, December 31, 2014.

3. Calculate selling price in 2014.

4. Calculate operating income for 2014.