Company X produced 120,000 units and sold 110,000 units during the year. Therefore, the company increased its inventory 10,000 units. Does this increase seem reasonable? Or is the company’s production output compared with its sales volume out of kilter?
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Company X |
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Per Unit |
Totals |
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Operating Profit Report for Year |
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Sales volume, in Units |
110,000 |
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Sales Revenue |
$1,400.00 |
$154,000,000 |
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Cost of Goods Sold Expense (see below) |
-760 |
-83,600,000 |
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Gross Margin |
$640.00 |
$70,400,000 |
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Variable Operating Expenses |
-300 |
-33,000,000 |
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Contribution Margin |
$340.00 |
$37,400,000 |
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Fixed Operating Expenses |
-21,450,000 |
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Operating Profit |
$15,950,000 |
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Manufacturing Activity Summary for Year |
Per Unit |
Totals |
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Annual Production Capacity, in Units |
150,000 |
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Actual Output, in Units |
120,000 |
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Raw Materials |
$215.00 |
$25,800,000 |
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Direct Labor |
125 |
15,000,000 |
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Variable Manufacturing Overhead Costs |
70 |
8,400,000 |
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Total Variable Manufacturing Costs |
$410.00 |
$49,200,000 |
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Fixed Manufacturing Overhead Costs |
350 |
42,000,000 |
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Product Cost and Total Manufacturing Costs |
$760.00 |
$91,200,000 |