Foxwood Company is a metal- and woodcutting manufacturer, selling products to the homeconstruction market. Consider the following data for 2014 (in thousands):

Sandpaper $ 2

Materials-handling costs 70

Lubricants and coolants 5

Miscellaneous indirect manufacturing labor 40

Direct manufacturing labor 300

Direct materials inventory, 1/1/2014 40

Direct materials inventory, 12/31/2014 50

Finished goods inventory, 1/1/2014 100

Finished goods inventory, 12/31/2014 150

Work-in-process inventory, 1/1/2014 10

Work-in-process inventory, 12/31/2014 14

Plant-leasing costs 54

Depreciation: plant equipment 36

Property taxes on plant equipment 4

Fire insurance on plant equipment 3

Direct materials purchased 460

Revenues 1,360

Marketing promotions 60

Marketing salaries 100

Distribution/shipping costs 70

Customer service costs 100

1. Prepare an income statement with a separate supporting schedule of costs of goods manufactured.

2. Suppose that both the direct material costs and the plant-leasing costs are for the production of 900,000 units. What is the direct material cost of each unit produced? What is the plant-leasing cost per unit? Assume that the plant-leasing cost is a fixed cost.

3. Suppose Foxwood manufactures 1,000,000 units next year. Repeat the computation in requirement 2 for direct materials and plant-leasing costs.

4. As a management consultant, explain to the company president why the unit cost for direct materials did not change in requirements 2 and 3 but the unit cost for plant-leasing costs did change.