Question

A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 75000 units on hand, the sales department budgeted sales of 250000 units in June, and the company desires to have 70000 units on hand on June 30. The budgeted cost of goods sold for June would be

A: $7650000

B: $7500000

C: $7350000 (I selected this answer and it was wrong)

D: $9750000

Answer 1

Cost per unit = $30

Budgeted sales for June = 250,000 units

Budgeted cost of goods sold = Cost per unit x Budgeted sales for June

= 30 x 250,000

= $7,500,000

Correct option is (B)

Beginning inventory of finished goods and ending inventory of finished goods are not relevant for calculating Budgeted cost of goods sold for the month of June, hence ignored.

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