Picture It Inc. manufactures customized wooden frames. The direct materials needed to construct the frames are wood, glass, and cardboard. Picture It has 22 employees who work for 40 hours in a work week and are each paid $17 per hour. The company produced and sold 900 frames in the month of September. During the month of September the following purchases were made to produce the 900 frames: Wood-4000 ft. at $1.20/ft. Glass-400 pieces at $5.60/piece Cardboard-500 pieces at $0.50/piece Required: 1. Calculate the total product cost for the month. Assume that all employees worked for 4 weeks in September and that the company incurred $55,000 as manufacturing overhead costs. 2. Calculate the per-unit cost. Round your answer to two decimal places. 3. Calculate the gross margin for the month of September assuming that the company sells each frame for $250.
Picture It Inc. manufactures customized wooden frames. The direct materials needed to construct the frames are wood, glass, and cardboard. Picture It has 22 employees who work for 40 hours in a work week and are each paid $17 per hour. The company produced and sold 900 frames in the month of September. During the month of September the following purchases were made to produce the 900 frames: Wood-4000 ft. at $1.20/ft. Glass-400 pieces at $5.60/piece Cardboard-500 pieces at $0.50/piece Required: 1. Calculate the total product cost for the month. Assume that all employees worked for 4 weeks in September and that the company incurred $55,000 as manufacturing overhead costs. 2. Calculate the per-unit cost. Round your answer to two decimal places. 3. Calculate the gross margin for the month of September assuming that the company sells each frame for $250.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Transcribed Image Text:Picture It Inc. manufactures customized wooden frames. The direct materials needed to construct the frames are wood, glass, and cardboard. Picture It has 22 employees
who work for 40 hours in a work week and are each paid $17 per hour. The company produced and sold 900 frames in the month of September.
During the month of September the following purchases were made to produce the 900 frames:
Wood-4000 ft. at $1.20/ft.
Glass-400 pieces at $5.60/piece
Cardboard-500 pieces at $0.50/piece
Required:
1. Calculate the total product cost for the month. Assume that all employees worked for 4 weeks in September and that the company incurred $55,000 as manufacturing
overhead costs.
2. Calculate the per-unit cost. Round your answer to two decimal places.
3. Calculate the gross margin for the month of September assuming that the company sells each frame for $250.
Expert Solution
Step 1
- The total cost of direct materials and labour as well as the total cost of manufacturing overhead can be added together to get the total cost of the product.
- Cost per unit is determined by adding fixed and variable costs together, then dividing the total number of units produced during a specified time period.
- Gross margin, a measure of profitability, contrasts a company's gross profit with its revenue or sales. A company's gross margin is displayed as a percentage. Gross profit is determined by calculating gross sales.
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