Betty DeRose, Inc. manufactures a single product. The company is in the process
ID: 2358785 • Letter: B
Question
Betty DeRose, Inc. manufactures a single product. The company is in the process of preparing its 2006 master budget and has the following information available: a. The January 1, 2006 balance sheet for the company is as follows: ASSETS LIABILITIES & EQUITY Cash ................................. $ 20,000 Accounts Payable ............... $ 84,300 Accounts Receivable ........... 100,000 Common Stock .................. 250,000 Raw Material Inventory ....... 13,200 Retained Earnings .............. 104,900 Finished Goods Inventory .... 26,000 Total ................................. $ 439,200 Equipment .......................... 460,000 Accumulated Depreciation .... (180,000) Total .................................. $ 439,200 b. The company expects to produce 55,000 units in January, 2006; 58,000 units in February, 2006; and 52,000 units in March, 2006. c. Raw materials inventory at January 1, 2006 consisted of 16,500 pounds. Each unit requires 3 pounds of raw materials. This raw material is purchased for $0.80 per pound. The ending inventory of raw materials should be 10% of the next months production needs. d. Direct labor costs are budgeted at $38,000 for January, 2006 and $18,000 for February, 2006. e. Manufacturing overhead is budgeted at $45,000 for each January and February, 2006. This amount includes depreciation of $3,000 per month. f. Finished goods inventory at February 28, 2006 is expected to be $39,000. g. Assume there is no beginning or ending work-in-process inventory. Calculate the budgeted cost of goods sold for the two month period, January - February, 2006.Explanation / Answer
on solving the above question the budgeted cost of goods sold for the two month period, January - February, 2006 comes out to be equal to $581,000
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