Question

During its first year of operations, Silverman Company paid $9,160 for direct materials and $9,700 for production workers' wages. Lease payments and utilities on the production facilities amounted to $8,700 while general, selling, and administrative expenses totaled $4,200. The company produced 5,300 units and sold 3,200 units at a price of $7.70 a unit.

What is Silverman's cost of goods sold for the year?

Answer 1

Silverman Company's cost of goods sold for the year is $16,640, calculated by determining the per-unit production cost and multiplying it by the number of units sold.

Step-by-step explanation:

The cost of goods sold (COGS) for Silverman Company can be calculated by adding up all the costs associated with production. This includes the costs for direct materials, production workers' wages, along with an apportioned amount of the lease payments and utilities that are directly associated with the production process. To calculate the cost allocated to the sold units, we need to find the per-unit production cost and then multiply that by the number of units sold. First, calculate

the total production cost (not including general, selling, and administrative expenses, as these are not part of COGS): Total production costs = Direct materials + Production workers' wages + Portion of lease payments and utilities = $9,160 + $9,700 + $8,700 = $27,560 Next, calculate the cost per unit by dividing the total production costs by the number of units produced: Cost per unit =

Total production costs / Units produced = $27,560 / 5,300 units
= $5.20 per unit Finally, multiply the cost per unit by the number of units sold to get COGS COGS = Cost per unit * Units sold = $5.20 * 3,200 units = $16,640