Top Trimaran Manufactures Sailboats Actual Amounts of Variable and Fixed Costs Were Not Materially

Essay

Top Trimaran manufactures sailboats. Due to recessionary conditions which have significantly depressed sales, the company had to cut back production to levels significantly below the normal level of 900 units a year. In 2020, the company's production resulted in the following figures:
$$\begin{array} { | l | r | } \hline \text { tem } & \text { Amount } \\\hline \text { Number of boats } & \\\hline \text { Opening inventory } &50 \\\hline \text { Production } & 740\\\hline \text { Sales } & (690 ) \\\hline \text { Ending inventory } &100 \\\hline & \\\hline \text { Standard cost per unit based on 500 units per year } & \\\hline \text { Raw materials } & \$ 13,000 / \text { unit } \\\hline \text { Production wages } & 28,000 / \text { unit } \\\hline \text { Variable production overhead } & 15,000 / \text { unit } \\\hline \text { Fixed production overhead } & 25,000 / \text { unit } \\\hline \text { Total production cost } & \$ 81,000 / \mathrm { unit } \\\hline & \$ 3,950,000 \\\hline \text { }&\text { }\\\hline \text { Opening inventory cost } & 89,700,000 \\\hline \text { Sales } & \$ 5 \\\hline\end{array}$$ Actual amounts of variable and fixed costs were not materially different from standard costs.
Required:
Determine the amount of cost that should be included in inventories and the gross margin for the year. Top Trimaran uses the first-in, first-out cost flow assumption.