Sponge Manufacturing Began Business at the Start of the Current

question 49

Essay

Sponge Manufacturing began business at the start of the current year and maintains its accounting records on an absorption-cost basis. The following selected information appeared on the company's income statement and end-of-year balance sheet: $\begin{array} { | l | r | } \hline { \text { Income-statement data: } } \\\hline \text { Sales revenues (35.000 units } \times \$ 22 ) & \$ 770,000 \\\hline \text { Gross margin } & 210,000 \\\hline \text { Total sales and administrative expenses } & 160,000 \\\hline \text { Balance-sheet data: } & \\\hline \text { Ending finished-goods inventory } ( 12,000 \text { units) }& 192,000 \\\hline\end{array}$ Sponge achieved its planned production level for the year. The company's fixed manufacturing overhead totalled $141,000, and the firm paid a 10% commission based on gross sales dollars to its sales force.
Required:
A. How many units did Sponge plan to produce during the year?
B. How much fixed manufacturing overhead did the company apply to each unit produced?
C. Compute Sponge's cost of goods sold.
D. How much variable cost did the company attach to each unit manufactured?

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Definitions:

B₂B Customers

Businesses that purchase goods or services from other businesses for use in their operations or reselling.

Types

Varieties or categories of something, classified based on common characteristics or attributes.

Attribute-Based Choice

Process in which consumers select a product based on attribute-by-attribute comparisons across brands.

Affective Choice

The decision-making process influenced by emotions and feelings, where individuals choose based on the emotional appeal of an option rather than its objective attributes.