Question

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $60. Wesley expects the following unit sales: January February 2,100 2,500 3,000 2,700 1,900 March April Мay Wesley's ending finished goods inventory policy is 30 percent of the next month's sales. Suppose each handisaw takes approximately 0.65 hours to manufacture, and Wesley pays an average labor wage of $13.50 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an endiing direct materials inventory policy of 10 percent of the following month's production requirements. Materlals other than the housing unit total $3.50 per handisaw. Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $0.70 per unit variable manufacturing overhead. Wesley's selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $16,000 per month Required: 1. Compute the budgeted cost of goods sold for the first quarter. 2. Compute the budgeted selling and administrative expenses for the first quarter. 3. Complete the budgeted income statement for the handisaw product for the first quarter. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Required 3 Compute the budgeted cost of goods sold for the first quarter. (Round direct material, direct labor and overhead costs per unit to 2 decimal places. Round final answers to the nearest dollar amount.) February January March 1st Quarter Total Budgeted Cost of Goods Sold 0 <Required 1 Required 2

Answer 1

Determination of the Cost of goods sold Particulars Direct Material (Plastic Housing) $ $ $ $ Calculation Given 6.00 Other Materials Given 3.50 $13.50 per Hour * 0.65 Hrs. $ $ $ Direct Labor 8.78 Variable Manufacturing Overhead Fixed Manufacturing Overheads Given 0.70 $ 72,000/ 27,000 Units 2.67 21.64 Computation of the Budgeted Cost of goods sold: Particulars Calculation February March January $ 45,447.50 $54,104.17$64,925.00 $164,476.67 Total #of Units@ $ 21.64 per Unit Budgeted Cost of goods sold Computation of the Budgeted Selling and Administration Expenses: Particulars Calculation February March Total January #of Units Selling Price per Unit Sales Value in Dollars Given 2,100 $ 126,000 150,000 $180,000 3,000 2,500 60 $ $ $ Given 60 60 9,000 $ 16,000 $ 25,000 $ 10,800$ 16,000 $ 26,800 $ Budgeted Selling Expenses Budgeted Administration Expenses 7,560 $ Sales in Dollars* 6% 27,360 48,000 75,360 $ 16,000 $ Given $ 23,560 $ Total Computation of Budgeted Income Statement Wesley Power Tools Budgeted Income Statement For the Quarter Ending March Particulars Calculation February March January Total Sales #of Units* $60 126,000 150,000 180,000 $ $ 456,000 Less : Cost of goods sold Gross Profit Less : Selling Expenses Less Administration Expenses Budgeted Net Operating Income (45,448) $(54,104) (64,925) $(164,477) $ From above 95,896 115,075$ (10,800) $ (16,000) $ 88,275 $ 80,553$ $ 291,523 (27,360) (48,000) 216,163 (7,560) $ $ (9,000) $ From above (16,000) $ $ (16,000) $ From above 56,993 $ $ 70,896$