Reference no: EM132580913

Selected account balances for the year ended December 31 are provided below for Superior Company. (All amounts given in thousand Tk.):

Selling and administrative salaries 110

Insurance, factory 8

Utilities, factory 45

Purchases of raw materials 290

Indirect labor 60

Direct labor ?

Advertising expense 80

Cleaning supplies, factory 7

Sales commissions 50

Rent, factory building 120

Maintenance, factory 30

Inventory balances at the opening and end of the year are as follows:

                                           Opening of the year                            End of year

Raw materials                               40                                         10

Work in process                                ?                                        35

Finished goods                                  50                                            ?

The total manufacturing costs for the year are Tk. 683; the goods available for sale total Tk. 740 and the cost of goods sold total Tk. 660.

Required:

Question a) Prepare the cost of goods sold schedule for the year.

Question b) Assuming that the company produces 40,000 units; compute the unit cost for direct materials used and the unit cost of rent on the factory building.

Question c) Assuming that the company expects to produce 50,000 units in the following year; what unit cost and total cost would you expect to be incurred for direct materials? For rent on the factory building? Further assume that direct materials is a variable cost and that rent is a fixed cost.

As the manager in charge of production costs, explain to the CEO the reason for any differences in unit cost between b and c above.