Given the Following Data from the Fun Toys and Games

question 102

Essay

Given the following data from the Fun Toys and Games Company for Year X2:
1/1/X2 12/31/X2
Direct materials inventory $40,000 $ 20,000
Work in Process inventory 25,000 15,000
Finished goods inventory 20,000 25,000
Sales 390,000
Gross margin 115,000
Direct material purchases 80,000
Prime costs (direct material + direct labour)210,000
Prepare a schedule of cost of goods manufactured.

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Definitions:

Minimum Efficient Scale

The smallest production quantity at which the long-run, total average cost is minimized.

Economies of Scale

Refers to the cost advantage that arises with increased output of a product, leading to a reduction in the per-unit cost.

Production Process

A sequence of steps or operations involved in the manufacture of goods or the delivery of services.

Minimum Efficient Scale

The smallest scale of production a firm can achieve while still taking full advantage of economies of scale.