Ceriweden, Inc There Are No Beginning Inventories

question 32

Essay

Ceriweden, Inc. has provided the following financial data for the year:
$$\begin{array} { | l | r | l | } \hline \text { Units produced and sold } & 3,500 & \text { units } \\\hline \text { Sales price } & \$ 220 & \text { per unit } \\\hline \text { Direct materials } & \$ 25 & \text { per unit } \\\hline \text { Direct labor } & \$ 45 & \text { per unit } \\\hline \text { Variable manufacturing overhead } & \$ 30 & \text { per unit } \\\hline \text { Variable selling and administrative costs } & \$ 20 & \text { per unit } \\\hline \text { Fixed manufacturing overhead } & \$ 105,000 & \text { per year } \\\hline \text { Fixed selling and administrative costs } & \$ 140,000 & \text { per year } \\\hline\end{array}$$ There are no beginning inventories. Prepare an income statement for the year using the traditional format.

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Definitions:

Consumer Price Index

An index measuring the change over time in the price level of a market basket of consumer goods and services purchased by households.

Purchasing Power

The real value of money in terms of the quantity of goods or services that one unit of money can buy.

Annual Interest Rate

The percentage rate at which interest is charged or paid on an amount over a year.

Inflation

Refers to the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.