Waterdown Manufacturing, Which Began Operations on January 1 of the Current

question 23

Essay

Waterdown Manufacturing, which began operations on January 1 of the current year, produces an industrial scraper that sells for $325 per unit. Information related to the current year's activities follows. $\begin{array} { l r } \text { Number of scrapers produced } & 20,000 \\\text { Number of scrapers sold } & 17,000 \\\text { Variable costs per unit: } & \\\quad \text { Direct materials } & \$ 25 \\\quad \text { Direct labour } & 35 \\\quad \text { Manufacturing overhead } & 60\\\text { Annual fixed costs: } & \\\quad \text { Manufacturing overhead } & \$ 400,000 \\\text { Selling \& administrative } & 140,000\end{array}$ Waterdown carries its finished-goods inventory at the average unit cost of production. There was no work in process at year-end.
Required:
A. Compute the company's average unit cost of production.
B. Determine the cost of the December 31 finished-goods inventory.
C. Compute the company's cost of goods sold.
D. If next year's production increases to 23,000 units and general cost behaviour patterns do not change, what is the likely effect on:
1. The direct-labour cost of $35 per unit? Why?
2. The fixed manufacturing overhead cost of $400,000? Why?

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Definitions:

Species Richness

The count of distinct species present in a particular ecological community, landscape, or geographic region.

Threatened

A conservation status that indicates a species is likely to become endangered within the foreseeable future across all or a significant portion of its range.

Endangered

Refers to species at risk of extinction due to a significant decline in their population or habitat.

Biotic Pollution

The negative impact on ecosystems and native species caused by the introduction and spread of invasive organisms.