Rooney Modems, Inc. makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. Acquired $815,000 of cash from the owners. Purchased $400,000 of manufacturing equipment. The equipment has a $44,000 salvage value and a four-year useful life. The company started and completed 6,400 modems. Direct materials purchased and used amounted to $53 per unit. Direct labor costs amounted to $38 per unit. The cost of manufacturing supplies used amounted to $9 per unit. The company paid $63,000 to rent the manufacturing facility. Magnificent sold all 6,400 units at a cash price of $185 per unit. (Hint: It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) The sales staff was paid a $7 per unit sales commission. Paid $52,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,300 salvage value and a three-year useful life. Administrative expenses consisting of office rental and salaries amounted to $73,900. Find the fixed cost using the formula: Fixed Cost = Total Cost of Production - (Variable Cost per Unit * Number of units purchased)
Rooney Modems, Inc. makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash. Acquired $815,000 of cash from the owners. Purchased $400,000 of manufacturing equipment. The equipment has a $44,000 salvage value and a four-year useful life. The company started and completed 6,400 modems. Direct materials purchased and used amounted to $53 per unit. Direct labor costs amounted to $38 per unit. The cost of manufacturing supplies used amounted to $9 per unit. The company paid $63,000 to rent the manufacturing facility. Magnificent sold all 6,400 units at a cash price of $185 per unit. (Hint: It will be necessary to determine the manufacturing costs in order to record the cost of goods sold.) The sales staff was paid a $7 per unit sales commission. Paid $52,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,300 salvage value and a three-year useful life. Administrative expenses consisting of office rental and salaries amounted to $73,900. Find the fixed cost using the formula: Fixed Cost = Total Cost of Production - (Variable Cost per Unit * Number of units purchased)
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Rooney Modems, Inc. makes modem cards that are used in notebook computers. The company completed the following transactions during year 1. All purchases and sales were made with cash.
- Acquired $815,000 of cash from the owners.
- Purchased $400,000 of manufacturing equipment. The equipment has a $44,000 salvage value and a four-year useful life.
- The company started and completed 6,400 modems. Direct materials purchased and used amounted to $53 per unit.
- Direct labor costs amounted to $38 per unit.
- The cost of manufacturing supplies used amounted to $9 per unit.
- The company paid $63,000 to rent the manufacturing facility.
- Magnificent sold all 6,400 units at a cash price of $185 per unit. (Hint: It will be necessary to determine the
manufacturing costs in order to record the cost of goods sold.) - The sales staff was paid a $7 per unit sales commission.
- Paid $52,000 to purchase equipment for administrative offices. The equipment was expected to have a $4,300 salvage value and a three-year useful life.
- Administrative expenses consisting of office rental and salaries amounted to $73,900.
Find the fixed cost using the formula:
Fixed Cost = Total Cost of Production - (Variable Cost per Unit * Number of units purchased)
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