is Question: 2 pts Suppose Steel City manufactures cast iron skillets. One model

Question

is Question: 2 pts Suppose Steel City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $35. Steel City projects sales of per skillet for direct materials, $4 per skillet for direct labor, and $3 per skillet for manufacturing overhead. Steel City has 65 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40% of the next month's sales. Selling and administrative expenses for this product line are $1,800 per month. Steel City has budgeted cost of goods sold of $9,975 for July per month. The production costs ar Compute the budgeted gross profit for July OA. $15,750 O B. $8,400 O C. $6,125 O D. $13,475 ick to selec el

Explanation / Answer

The answer is "B. $8,400”

Budgeted sales = 525 x 35 = $18,375

Budgeted cost of goods sold = $9,975 (given)

Budgeted gross profit = budgeted sales - budgeted cost of goods sold = 18,375 - 9,975 = $8,400

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