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19 October, 06:22

During its first year of operations, Silverman Company paid $19,000 for direct materials and $10,500 for production workers' wages. Lease payments and utilities on the production facilities amounted to $9,500 while general, selling, and administrative expenses totaled $5,000. The company produced 6,500 units and sold 4,000 units at a price of $8.50 a unit. What is the amount of finished goods inventory on the balance sheet at year-end?

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  1. 19 October, 06:23
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    The inventory value in the balance sheet is $ 15,000

    Explanation:

    Computation of per unit cost of production

    Direct materials $ 19,000

    Direct Labor $ 10,500

    Production facilities related cost $ 9,500

    Total cost of production $ 39,000

    Units produced 6,500 units

    Pr]oduction cost per unit $ 6 per unit

    Units sold 4,000 units

    Units in hand (6,500 produced - 4,000 sold) 2,500 units

    Inventory value 2,500 units on hand * $ 6 per unit $ 15,000
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