Wesley Power Tools manufactures a wide variety of tools and accessories. One of

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 $44. Wesley expects the following unit sales:

Wesley’s ending finished goods inventory policy is 30 percent of the 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 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 $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley’s selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month.

Compute the budgeted cost of goods sold. (Do not round your intermediate calculations.)

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:

Wesley’s ending finished goods inventory policy is 30 percent of the 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 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 $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley’s selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month.

Required: 1.

Compute the budgeted cost of goods sold. (Do not round your intermediate calculations.)

January February March Apri May 2,000 2,200 2,700 2,500 1,900

Explanation / Answer

Ans-

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Cost of Goods Manufactured Budget Month Jan Feb Mar Total Direct Material Purchases (a)           24,198           27,533           29,800     81,530 Beginning Direct Material (b)                515                588                660        1,763 Ending Direct Material ( c )                588                660                580        1,828 Direct Material Cost (a+b-c)           24,125           27,460           29,880     81,465 Direct Labor Cost           27,810           31,725           35,640     95,175 Manufacturing Overhead           74,472           74,820           75,168 224,460 Total Manufacturing Costs         126,407         134,005         140,688 401,100 Beginning Work in Process                    -                      -                      -                -   Ending Work in Process                    -                      -                      -                -   Budgeted Cost of Goods Manufactured         126,407           48,759           61,823 236,989 Add Finished goods beginning balance           39,391           40,483           46,958 126,832 Goods Available For sale         165,798           89,242         108,781 363,821 Less Finished goods ending balance           43,330           49,684           43,480 136,494 Cost of goods sold         122,468           39,558           65,301 227,328

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