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Chapter 16: Q24E (page 893)

Question:Calculating income and cost per unit for a merchandising company

Conway Brush Company sells standard hair brushes. The following information summarizes Conway’s operating activities for 2018:

Selling and Administrative Expenses $ 47,058

Purchases 85,800

Net Sales Revenue 151,800

Merchandise Inventory, January 1, 2018 7,920

Merchandise Inventory, December 31, 2018 11,748

Requirements

1. Calculate the operating income for 2018.

2. Conway sold 6,600 brushes in 2018. Compute the unit cost for one brush.

Short Answer

Expert verified

The net operating income of Conway Brush Company is $22,770 and the unit cost for one brush is $12.42

Step by step solution

01

Step-by-Step SolutionStep 1: Calculation of operating income

Income Statement

Amount ($)

Amount ($)

Net Sales Revenue

$151,800

Less: COGS

Merchandise Inventory, Jan 1, 2018

$7,920

Purchases

$85,800

Less: Merchandise Inventory, Dec 31, 2018

-$11,748

$81,972

Gross Profit

$69,828

Selling and administrative expenses

$47,058

Net Operating Income

$22,770

02

Computation of unit cost of one brush

Unitcostforonebrush=CostofgoodssoldNumberofunitssold=$81,9726,600=$12.42

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Most popular questions from this chapter

What are the three manufacturing costs for a manufacturing company? Describe each.

Preparing a schedule of cost of goods manufactured Wilson Corp., a lamp manufacturer, provided the following information for the year ended December 31, 2018:

Balances: Beginning Ending

Direct Materials \( 59,000 \) 23,000

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Finished Goods Inventory 41,000 44,000

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