Question

During its first year of operations, Silverman Company paid $15,085 for direct materials and $10,200 for production workers' wages. Lease payments and utilities on the production facilities amounted to $9,200 while general, selling, and administrative expenses totaled $4,700. The company produced 6,050 units and sold 3,700 units at a price of $8.20 a unit. What is the amount of finished goods inventory on the balance sheet at year-end

Answer 1

$13,395

Step-by-step explanation:

Finished Goods Inventory = Production Cost x Ending Units / Units Produced

where,

Production Cost is Calculated as :

Consider only production costs.

Production Cost = $15,085 + $10,200 + $9,200 = $34,485

Ending Units = 6,050 units - 3,700 units = 2,350 units

Units Produced = 6,050 units

therefore,

Finished Goods Inventory = $34,485 x 2,350 units/ 6,050 units = $13,395