Question

question 21

SAMSON INC expects to sell 10000 barbells for $18 each . direct material costs are $5 direct manufacturing labour is $6 , and manufacturing overhead is $2.50per barbell . each barbell requires 6 kilogram of material which is all added at the start of production . the units in work process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs the units in beginning inventory are completed before new units started. each barbell requires one- quarter hour of direct labour , and manufacturing overhead is allocated based on direct labour hours. marketing costs are $2 per barbell . the following inventory levels are expected to apply to 2016:

beginning inventory ending inventory

direct material 500 kg 800 kg

working process inventory 100 units 200 units

finished goods inventory 200 units 150 units

on the 2016 budgeted income what amount will be reported for cost of goods sold ?

1-$155000

2-$135000

3-$ 132975

4-134325

5-135675

Answer 1

The correct answer is

B) - $ 135000

Calculation

Cost of goods sold = no. Of units sold (direct material +direct labour +manufacturing overheads)

= 10000×(6+5+2.5)

= $ 135000

Explanation

Marketing costs is not part of cost of goods sold