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	2,200
February	2,400
March	2,800
April	2,500
May	2,000

Wesley’s ending finished goods inventory policy is 20 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 $14.50 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 ending direct materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the housing unit total $4.50 per handisaw.

Manufacturing overhead for this product includes $63,000 annual fixed overhead (based on production of 27,000 units) and $0.80 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.

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.) January February March 1st Quarter Total Budgeted Cost of Goods Sold

Answer 1

B C D ljan feb mar 1st quarter total 2200 2400 2800 7400 23.06 23.06 23.06 23.06 50728.33 553401 64563.33| 170631.67 4.5 9.425 2.33 0.8 23.06 1 1) 2 unit sales 3 x unit cost 4 budgeted cost of goods sold 5 6 working notes of unit cost : 7 material 8 plastic 9 other 10 labor(14.5*0.65) 11 manufacturing overhead 12 fixed (63000/27000) 13 variable 14 unit cost 15 16 2) 17 unit sales 18 X sale price 19 sale in dollars 20 X variable selling expense 21 variable selling and admin expenses 22 Add: fixed selling and admin expenses 23 budgeted selling and admin expenses 24 25 3) 26 budgeted sales revenue 27 budgeted cost of goods sold 28 budgeted gross profit 29 budgeted selling and admin expenses 30 budgeted net operating income 31 601 feb mar 2200 2400 60 132000 144000 6.00% 6.00% 79208640 16000 16000 23920 24640 2800 60 168000 6.00% 10080 16000 2 6080 jan feb mar 132000 144000 168000 50728.33 5534064563.33 81271.67 88660 103436.67 23920.00 24640 26080 57351.6764020177356.67

B lian Ε 1st quarter total =B2+C2+D2 1 1) 2 unit sales 3 x unit cost 4 budgeted cost of goods sold 2200 =B14 =B2*B3 feb 2400 I=B3 =C2*C3 mar 2800 =C3 =D2*D3 =D3 =E2*E3 5 4.5 6 working notes of unit cost : 7 material 8 plastic 16 9 other 10 labor(14.5*0.65) = 14.5*0.65 11 manufacturing overhead 12 fixed (63000/27000) =63000/27000 13 variable 0.8 14 unit cost =SUM(B8:B13) 15 16 2) lian 17 unit sales 2200 18 X sale price 60 19 sale in dollars =B17*B18 20 X variable selling expense 0.06 21 variable selling and admin expenses =B19*B20 22 Add : fixed selling and admin expenses 16000 23 budgeted selling and admin expenses =B21+B22 24 25 3) jan 26 budgeted sales revenue =B19 27 budgeted cost of goods sold =B4 28 budgeted gross profit =B26-B27 29 budgeted selling and admin expenses =B23 30 budgeted net operating income =B28-B29 feb mar 2400 2800 60 60 =C17*C18 =D17*D18 0.06 0.06 =C19*C20 =D19*D20 16000 16000 =C21+C22 =D21+D22 feb mar I=C19 =D19 1 =C4 =D4 I=C26-C27 =D26-027 =C23 =D23 =C28-C29 =D28-D29 31