Kim, Inc Began Business at the Start of the Current Year

question 39

Essay

Kim, Inc. 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: $$\begin{array}{l}\text { Income-statement data: }\\\begin{array} { l r } \text { Sales revenues } ( 35,000 \text { units } \times \$ 22 ) & \$ 770,000 \\\text { Gross margin } & 210,000 \\\text { Total sales and administrative expenses } & 160,000 \\\text { lance-sheet data: } & \\\text { Ending finished-goods inventory } ( 12,000 \text { units) } & 192,000\end{array}\end{array}$$
Kim achieved its planned production level for the year. The company's fixed manufacturing overhead totaled $141,000, and the firm paid a 10% commission based on gross sales dollars to its sales force.
Required:
A. How many units did Kim plan to produce during the year?
B. How much fixed manufacturing overhead did the company apply to each unit produced?
C. Compute Kim's cost of goods sold.
D. How much variable cost did the company attach to each unit manufactured?

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Definitions:

Accounting Cycle

The series of steps followed by an organization to record and analyze financial transactions, culminating in financial statements.

Post-closing Trial Balance

A financial report created after all adjusting and closing entries are made, showing account balances ready for the next accounting period.

Closing Entries

Journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent accounts, thereby preparing the accounts for the next accounting period.

Correcting Entry

A journal entry made in the accounting records to amend an error or oversight in previously recorded transactions.