During its first year of operations, Nickelback Company paid $11,000 for direct

Question

During its first year of operations, Nickelback Company paid $11,000 for direct material, $20.000 in wages for production workers, and $30,000 wages for administrative and sales personnel. Lease payments and utilities on the administrative building and production facilities amounted to $5,000 and $7,000, respectively. General, selling and administrative expenses were $6,000. The company owns a delivery car and manufacturing equipment. The annual depreciation on the car is $1,000. The original cost of the equipment is $10,000 and has a salvage value of $2,000 after 4 years. The company produced 5,000 units and sold 4,000 units at a price of $15 a unit. Indicate the average cost to produce one unit Indicate the cost of goods sold Which of the following transactions would reduce net income for the period and WHY? Paid $1.600 cash for raw material cost Paid administrative salaries of $2,500 Depreciated production equipment for $3,000 Purchased $5,000 of merchandise inventory WHY: Green Company makes calculators. During the most recent accounting period. Green paid $3,000 for raw materials. $4,000 for labor, and $2.000 for overhead costs that were incurred to make calculators. Green started and completed 10.000 calculators, of which 7,000 were sold. Based on this information, how much expense would Green recognize on the income statement?

Explanation / Answer

2. The correct option is b.

Administrative salary is an indirect expense, if this expense is occurred it would reduce the net income.

3. Total cost= 3000+4000+2000 =9000

Cost to be recognied= 9000*7000/10000

$ 6300

  

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