Wesley Power Tools manufactures a wide variety of tools and accessories. One of
ID: 2447152 • Letter: W
Question
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 $50. Wesley expects the following unit sales:
Wesley’s ending finished goods inventory policy is 35 percent of the next month’s sales.
Suppose each handisaw takes approximately .35 hours to manufacture, and Wesley pays an average labor wage of $12.50 per hour.
Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $4.00 each. The company has an ending raw materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the housing unit total $3.50 per handisaw.
Manufacturing overhead for this product includes $63,000 annual fixed overhead (based on production of 27,000 units) and $.90 per unit variable manufacturing overhead. Wesley’s selling expenses are 4 percent of sales dollars, and administrative expenses are fixed at $17,000 per month.
Compute the budgeted cost of goods sold following for the first quarter. (Round cost per unit to 2 decimal places. Round final answers to the nearest dollar amount.)
Compute the budgeted selling and administrative expenses following for the first quarter.
Complete the budgeted income statement for the handisaw product for the first quarter. (Round cost per unit to 2 decimal places. Round final answers to the nearest dollar amount.)
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 $50. Wesley expects the following unit sales:
Explanation / Answer
Details Amt $ Direct Material /unit(4+3.5) 7.50 Direc Labor =0.35*12.5 4.38 Var Mfg Oh /unit 0.90 Fixed Mfg OH /Unit= 63000/27000 2.3 Cost of prod /unit 15.1 Month Jan Feb Mar Apr May Sales units 2200 2600 3100 2600 2300 Reqd Closing Inventory Units 910 1085 910 805 0 Rqd Production in month 3110 2775 2925 2495 Reqd Closing raw material units 277.5 292.5 249.5 0 Raw Material cost @7.5 23,325 20,813 21,938 18,713 Reqd Closing Inv Raw Materials 2,081 2,194 1,871 Ans 3 Budgeted Income Statement Q1 Details Jan Feb Mar Total Sales Revenue 110,000 130,000 155,000 395,000 Less : Cost of Goods - Op Stock - FG - 13,741 16,384 30,125 Raw Materials - 2,081 2,194 4,275 Total Opening Stock - 15,822 18,577 34,400 Materials for production 23,325 20,813 21,938 66,075 Material purchase for closing stock 2,081 2,194 1,871 6,146 Direct Labor 13,606 12,141 12,797 38,544 Variable OH 2,799 2,498 2,633 7,929 Fixed OH 7,257 6,475 6,825 20,557 Less : Closing Stock - Finished Goods @15.10 13,741 16,384 13,741 43,866 Raw Material stock 2,081 2,194 1,871 6,146 Total Closing Stock 15,822 18,577 15,612 50,012 Ans 1 Cost Of Goods sold 33,246 41,364 49,028 123,638 Gross Profit 76,754 88,636 105,972 271,362 Operating Expense - Ans 2 Selling Expenses 4,400 5,200 6,200 15,800 Admin Exp 17,000 17,000 17,000 51,000 Net Opearating Income 55,354 66,436 82,772 204,562
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