4. Fredericksen Corporation makes one product and has provided the following inf

Question

4. Fredericksen Corporation makes one product and has provided the following information Budgeted sales, February 8.700 units 6 pounds S 2.00 per pound Raw materials cost Direct labor requirement per unit of output Direct labor wage rate Predetermined overhead rate (all variable) Variable selling and administrative expense Fixed selling and administrative expense 2.9 direct labor hours S 21.00 per direct labor-hour S 10.00 per direct labor-hour S 1.10 per unit sole s 80,000 per month The estimated cost of goods sold for February is closest to:

Explanation / Answer

Budgeted sales            8,700 Raw material required per unit 6 pounds Total raw material required (8,700*6)         52,200 Raw material cost per pound $                2 Total raw material cost (52,200*$2) $   104,400 Direct labour required per unit 2.9 hours Total direct labour hours required (2.9*8,700)         25,230 Direct labour wage rate per hour $             21 Total direct labour cost (25,230*$21) $   529,830 Pre determined overhead rate $             10 Total overhead cost ($10*25,230) $   252,300 Total cost of goods sold ($104,400+$529,830+$252,300) $   886,530

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