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Q24E

Expert-verified
Horngren'S Financial And Managerial Accounting
Found in: Page 893

Short Answer

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.

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

See the step by step solution

Step by Step Solution

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

Step 2: Computation of unit cost of one brush

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