Question

Exercise 9-13 (Video) Fultz Company has accumulated the following budget data for the year 2020. 1. 3. 4. 5. Sales: 31,410 units, unit selling price $89. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $8 per direct labor hour. Inventories (raw materials only): beginning, 10,240 pounds; ending, 15,220 pounds. Selling and administrative expenses: $170,000; interest expense: $30,000. Income taxes: 30% of income before income taxes. Prepare a schedule showing the computation of cost of goods sold for 2020. FULTZ COMPANY Computation of Cost of Goods Sold Cost of one unit of finished goods: Direct materials Direct labor Manufacturing overhead Total Cost of Goods Sold

Answer 1

	Fultz Company
	Computation of Cost of goods Sold
	For the year ending 2020
	Cost of one unit of finished goods
	Direct Materials	(1 pound X $5)	$                   5
	Direct Labor	(3 hours X $12)	$                 36
	Manufacturing overhead	(3 hours X $8)	$                 24
	Total manufacturing cost		$                 65
	Cost of goods sold	(31410 units X $65)	$ 20,41,650
	Fultz Company
	Budgeted Income statement
	For the year ending 2020
	Sales	(31410 units X $89)	$ 27,95,490
Less:	Cost of goods sold		$ 20,41,650
	Gross profit		$     7,53,840
Less:	Selling and Administration expenses		$     1,70,000
	Income from operations before Interest and tax		$     5,83,840
Less:	Interest expense		$        30,000
	Profit before tax		$     5,53,840
Less:	Tax @ 30%	($553840 X 30%)	$     1,66,152
	Profit after tax		$     3,87,688