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 $50. 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 .35 hours to manufacture, and Wesley pays an average labor wage of $12.50 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory policy of 10 percent of the following month's production requirements. Materials other than the housing unit total $400 per handisaw. Manufacturing overhead for this product includes $66,000 annual fixed overhead (based on production of 27,000 units) and $1.00 per unit variable manufacturing overhead. Wesley?s selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $18,000 per month. Required: 1. Compute the budgeted cost of goods sold following for the first quarter. (Round cost per unit to 2 decimal places. Round final answers to the nearest dollar amount.)

Explanation / Answer

Variable Cost per unit sold = Direct Material + Direct Labor = Cost of Plastic Housing + Cost of other Material + Direct Labor = 6 + 4 + (12.5 * 0.35) = $14.375 per unit

Manufacturing Fixed OH per unit = 66,000 / 27,000 = 2.44 p.u.

Selling expense per unit = Selling price * 6% = 50*6% = $3

Particulars January February March 1st Quarter Total Units sold          2,300             2,200        2,900                             7,400 Prime Cost @ 14.375 p.u.        33,063           31,625     41,688                       1,06,375 Fixed Manufacturing OH @ 2.44 p.u.          5,612             5,368        7,076                           18,056 Variable Manufacturing OH @ 1 p.u.          2,300             2,200        2,900                             7,400 Administrative Expense        18,000           18,000     18,000                           54,000 Selling Expenses @ 3 p.u.          6,900             6,600        8,700                           22,200 Cost of Goods sold        65,875           63,793     78,364                       2,08,031

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.