Question

During its first year of operations, Silverman Company paid $7,000 for direct materials and $9,500 for production workers' wages. Lease payments and utilities on the production facilities amounted to $8,500 while general, selling, and administrative expenses totaled $4,000. The company produced 5,000 units and sold 3,000 units at a price of $7.50 a unit. What is the amount of finished goods inventory on the balance sheet at year-end?

Answer 1

The amount of finished goods inventory on the balance sheet at year-end would be $10,000

Step-by-step explanation:

Cost making different part of the cost of inventory are the cost use to make all those production costs that are necessary for the purchase of materials to make them into finished goods which we have in these case as;

Cost production = All direct costs use for production

These cost includes

All Cost of production = $7000 + $9,500+ $8500 = $25000

And the production cost is for 5000 units meaning production cost was which we have as

=$25000 / 5000

=5$

Therefore closing inventory value which would be = 2000×5

= $10000

The amount of finished goods inventory on the balance sheet at year-end would be $10,000

Answer 2

Closing Inventory would be standing at $10000

Step-by-step explanation:

The cost that forms part of the cost of inventory are all those production costs that are necessary to convert it into finished goods which in this case is:

Production cost = All direct costs are production costs

And

All Direct Cost = $7000 Direct Mat + $9500 Production Workers Wages + $8500 Direct Utilities bills = $25000

And the production cost incurred was for 5000 units which means the unit production cost was $5 ($25000 / 5000 units).

So closing inventory value would be = 2000 closing inventory units * $5

= $10000