Suppose Chef Kitchen manufactures cast iron skillets. One model is a? 10-inch sk

Question

Suppose Chef Kitchen manufactures cast iron skillets. One model is a? 10-inch skillet that sells for $22. Chef Kitchen projects sales of 575 ?10-inch skillets per month. The production costs are $8 per skillet for direct? materials, $2 per skillet for direct? labor, and $4 per skillet for manufacturing overhead. Chef Kitchen has 55 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 35?% of the next? month's sales. Selling and administrative expenses for this product line are $1,100 per month. Chef Kitchen is budgeted to produce 721 skillets in July with a $14 production cost per skillet.

Compute the budgeted cost of goods sold for July.

A) $8,310

B) $10,094

C) $8,050

D) $10,864

Explanation / Answer

C) $8,050

Budgeted cost of goods sold = (575 * $8) + (575 * $2) + (575 * 4)

Budgeted cost of goods sold = $4,600 + $1,150 + $2,300

Budgeted cost of goods sold = $8,050

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