Week #10- Chapter 7 Home P7-1)- Determine badgeted eost ofgoods sold; pre pare o

Question

Week #10- Chapter 7 Home P7-1)- Determine badgeted eost ofgoods sold; pre pare operating budgets Problem I Textbook Reference: P7-1)- Determine budgeted eost ofgoods sold Joyce Corporation prepares monthly operating and financil bulgets. The operating budgets for June and July the following data: June July Units Produced 400,000 360,000 Units Sold 360,000 400,000 All sales are S30 per unit. Direct materias, and variable s3 per unit, respectively. manufact administrative expenses are budgeted at $1,200,000 income before federal income taxes. The inve Required: a. Prepare monthly budget estimates of cost of goods sold assuming that FIFO inventory procedure is b. Prepare planned operating budgets for June and July. ure $30 per unt. Direct materias, direct labor, and variable manufacturing overhead are estimated at $3, $6, and Total fixed manufacturing overhead is budgeted at $1,080,000 per month. Selling and plus 10% of sales, while federal income taxes are budgeted at 40% of ntory at June I consists of 200,000 units with a cost of $17.10 each ***Templates have been provided on the next page***

Explanation / Answer

Problem1-Requirement A June July A Planned production in units 400000 360000 Planned production costs: B=A*3 Direct material $         1,200,000 $          1,080,000 C=A*6 Direct Labor $         2,400,000 $          2,160,000 D=A*3 Variable manufacturing overhead $         1,200,000 $          1,080,000 E Fixed manufacturing overhead $1,080,000 $1,080,000 F=B+C+D+E Total Planned Production costs $         5,880,000 $          5,400,000 Add: Beginning inventory cost G=200000*17.10 .June1 $         3,420,000 N/A H .July1 N/A $3,528,000 I=F+G/H Cost of goods available for sales $         9,300,000 $          8,928,000 Less:ending inventory costs: J .June30 $3,528,000 N/A K .July30 N/A $          3,000,000 L=I-J/K Cost of goods sold $         5,772,000 $          5,928,000 Calculation of Unit Product Cost June July M Planned production cost $         5,880,000 $          5,400,000 N Planned production units 400000 360000 P=M/N Unit product cost $                 14.70 $                   15.00 Ending Inventory of June (FIFO Method) Units sold in June 360000 Sales from Beginning inventory 200000 Sales from June production(360000-200000) 160000 Number of units in Rnding inventory from June production 240000 (400000-160000) Ending Inventory cost(240000*14.70) $         3,528,000 Ending Inventory of July (FIFO Method) Units sold in July 400000 Sales from Beginning inventory 240000 Sales from July production(400000-240000) 160000 Number of units inClosing inventory from July production 200000 (360000-160000 Ending Inventory cost(200000*15.00) $         3,000,000 Problem1-Requirement B A Sales revenue $       10,800,000 $        12,000,000 B Less: cost of goods sold $         5,772,000 $          5,928,000 C=A-B Gross Margin $         5,028,000 $          6,072,000 Less: Selling & Administrative expenses D=A*0.1 Variable $         1,080,000 $          1,200,000 E Fixed $1,200,000 $1,200,000 F=C-D-E Operating Income $         2,748,000 $          3,672,000 G=F*0.4 Less:Income Tax expense $         1,099,200 $          1,468,800 H=F-G Net Income $         1,648,800 $          2,203,200

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