The XYZ Company manufactures chairs which are world renowned for their accuracy

Question

The XYZ Company manufactures chairs which are world renowned for their accuracy when thrown in a Frisbee fashion. It expects to produce and sell 20,000 chairs in 2016. Direct materials costs for each chair totals $200, while direct labor is $80. Manufacturing overhead is $60 per unit (of which 20% is variable). Selling and administrative cost is $30 per unit (all fixed) while research and development costs are $20 per unit (all fixed). In addition, Accounts Payable is expected to increase by $50,000 during the period. What is the expected amount of cost of goods sold?

Explanation / Answer

Expected amount of cost of goods sold=20000*(200+80+60)= $6800000

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