Question

I need help with question 1. Please show how you calculate the answers. Thanks

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following information about this product line to complete the problem requirements. Each handisaw sells for $44. Wesley expects the following unit sales:

January 2,000,

February 2,200,

March 2,700,

April 2,500,

May 1,900.

Wesley's ending finished goods inventory policy is 30% of next month's sales.

Suppose each handisaw takes approximately 0.75 hours to manufacture, and Wesley pays an average labor wage of $18 per hour.

Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 each. The company has an ending raw materials inventory policy of 25% of the following month's production requirements. Materials other than The housing unit total $4.50 per handisaw.

Manufacturing overhead for this product includes $27,900 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley's selling expenses are 7% of sales dollars, and administrative expenses are fixed at $18,000 per month.  

1. Compute the budgeted cost of goods sold for the first quarter.

Budgeted Cost of Goods Sold: January ______________ February________________ March_______________ 1st Quarter Total___________________  

Answer 1

	Budgeted cost of goods sold
		Jan	Feb	March	1st Quarter total
	Cost of manufacture per unit	$26.23	$26.23	$26.23
	Sales Units budgeted	2,000	2,200	2,700
	Cost of goods sold	$52,466.67	$57,713.33	$70,830.00	$181,010.00
	working
a	Particulars	January	February	March	April
	Budgeted Sales	2,000	2,200	2,700	2,500
	Add: Ending Inventory	660	810	750
	Less: Opening Inventory	600	660	810
	Production	2,060	2,350	2,640
b	Cost of Production
		January	February	March
	Units Produced	2,060	2,350	2,640
	Material Cost ($) units x $4.50	$9,270	$10,575	$11,880
	Plastic Housing cost ($) units x $6	$12,360	$14,100	$15,840
	Labour Cost ($) units x 0.75 x $18	$27,810	$31,725	$35,640
	Manufacturing overahead
	Variable overahead units x $1.20	$2,472	$2,820	$3,168
	Fixed overahead ($27,900/27,000)	$2,129	$2,428	$2,728
	Total production cost	$54,041	$61,648	$69,256
	Cost per unit produced	$26.23	$26.23	$26.23