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home / study / business / accounting / accounting questions and answers / Apex Company Manufactures And Sells Executive Writing Desks. The Following Information Gathered ... Question: Apex Company manufactures and sells executive writing desks. The followi... Apex Company manufactures and sells executive writing desks. The following information gathered by the company’s accountant is for the 2017 budget: The company expects to sell 1,000 executive writing desks during 2017 at an estimated price of $450 per desk. Materials and labor per desk: Direct materials (wood) 5 board feet (b.f) per desk Direct manufacturing labor 6 hours per desk Costs: 2016 Unit price 2017 Unit Price Wood $28 per b.f. $30.00 per b.f. Direct manufacturing labor $24.00 per hour $25.00 per hour Beginning Ending Inventory Inventory Inventories: 1/1/2017 12/31/2017 Finished goods (executive writing desks) 100 units 200 units Direct materials (wood) 2,000 b.f. 1,500 b.f. Other costs: Budgeted variable manufacturing overhead: Indirect manufacturing labor $28,000 Indirect materials 13,200 Utilities 5,000 Budgeted fixed manufacturing overhead: Depreciation – factory equipment 5,060 Factory rent 12,000 Factory manager’s salary 30,000 Factory security 13,000 Apex uses direct manufacturing labor-hours as the cost allocation base (denominator level) to allocate variable and fixed manufacturing costs to production. Budgeted variable marketing expense is 30 sales visits at $250 per visit. Budgeted fixed non-manufacturing costs are: Selling expense, $17,000 Administrative expense, 13,000 The company plans to declare a common stock cash dividend of $5,000 in December 2017. The inventoriable unit cost for ending finished goods inventory on December 31, 2016, is $375. The company uses FIFO inventory method for both direct materials and finished goods. Budgeted balances at December 31, 2017, in the selected accounts are: Cash…………………………………………………………… $10,000 Accounts receivable…………………………………………… 36,000 Factory equipment (net) ………………………………………. 750,000 Office furniture and fixtures (net)……………………………... 300,000 Accounts payable……………………………………………… 10,000 Note payable (due 02/01/2018)…………………………………… 7,000 Accumulated depreciation – factory equipment……………… 150,000 Accumulated depreciation – office furniture and fixtures……. 50,000 Allowance for doubtful accounts……………………………… 1,740 Note payable (due 09/30/2020) ……………………………….. 78,000 Bonds payable (maturing 12/31/2030) ……………………….. 100,000 Common stock ($1 par value) ………………………………… 100,000 Additional paid in capital……………………………………… 600,000 Retained earnings (balance at 1/1/17) ………………………… 101,520 The company’s income tax rate is 20%.
10.Prepare a cost of goods manufactured budget
Explanation / Answer
10.
Workings:
APEX COMPANY Cost of goods manufactured budget Beginning inventory of direct materials Note 2 56000 Add: Purchase of direct materials Note 1 150000 Direct material available for production 206000 Less: Ending inventory of direct material Note 3 45000 Direct material used for manufacture 161000 Direct labor cost incured Note.5 165000 Variable manufacturing overhead Note.6 46200 Fixed manufacturing overhead Note.7 60060 Cost of goods manufactured 432260Related Questions
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