Mary’s Mugs produces and sells various types of ceramic mugs. The business began operations on…
Mary's Mugs produces and sells various types of ceramic mugs. The business began operations on January 1, year 1, and its costs incurred during the year include theseVariable costs (based on mugs produced):Direct materials cost$4,000Direct manufacturing labor costs30,820Indirect manufacturing costs1,000Administration and marketing2,260Fixed costs:Administration and marketing costs12,100Indirect manufacturing costs4,180
On December 31, year 1, direct materials inventory consisted of 4,000 pounds of material. Production in that year was 20,000 mugs. All prices and unit variable costs remained constant during the year. Sales revenues for year 1 was $66,600. Finished goods inventory was $4,000 on December 31, year 1. Each finished mug requires 0.4 pounds of material.(Do not round intermediate calculations.)
Compute the operating profit (loss) for year 1.