Wesley Power Tools manufactures a wide variety of tools and accessories. One of
ID: 2446824 • Letter: W
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 .55 hours to manufacture, and Wesley pays an average labor wage of $15.50 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 $4.00 per handisaw.
Manufacturing overhead for this product includes $69,000 annual fixed overhead (based on production of 24,000 units) and $.80 per unit variable manufacturing overhead. Wesley’s selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $15,000 per month.
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:
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.) January February March 1st Quarter Total Budgeted Cost of Goods Sold 2. Compute the budgeted selling and administrative expenses following for the first quarter January February March 1st Quarter Total Budgeted Selling and Administrative Expenses 3. Complete the budgeted income statement for the handisaw product for the first quarter. (Round cost per unit to 2 decimal places. Round final answers to the nearest dollar amount.) WE SLEY POWER TOOLS Budgeted Income Statement For the Quarter Ending March January February March 1st Quarter Total Budgeted Gross Profit Budgeted Net Operating IncomeExplanation / Answer
Calculation of No of Units manufactured January February March Opening Balance 660 750 930 Sales 2200 2500 3100 Closing Balance 750 930 840 Units manufactured 2290 2680 3010 Note Calculation of Opening balance for january 2200 * 0.3 (30% of current month sale) Closing balance are equal to 30% of next month sale Units manufactured = Sales + Closing balance - Opening balance Calculation of Labour cost January February March Units produced 2290 2680 3010 Labour hrs/ unit 0.55 0.55 0.55 Labour hours taken 1259.5 1474 1655.5 Cost per hour 15.5 15.5 15.5 cost of labour 19522.25 22847 25660.25 Calculation of raw material cost January February March Opening Balance 229 268 301 Units manufactured 2290 2680 3010 Closing Balance 268 301 253 Raw material required 2329 2713 2962 Material cost 13974 16278 17772 Note Calculation of Opening balance for january 2290 * 0.1 (10% of current month production) Closing balance are equal to 10% of next month sale Units manufactured = Sales + Closing balance - Opening balance Calculation of cost of goods sold January February March Total housing cost 13974 16278 17772 48024 other material cost 9160 10720 12040 31920 Labour cost 19522.25 22847 25660.25 68029.5 Other Variable cost 1832 2144 2408 6384 (0.4 * Units produced) Total cost of Units produced 44488.25 51989.00 57880.25 154357.5 Cost per unit 19.43 19.40 19.23 Units sold 2200 2500 3100 Cost of units sold 42739.80 48497.20 59610.89 150847.9 Calculation of budgeted selling & administrative expenses January February March Total Units sold 2200 2500 3100 manufacturing overhead cost @ 2.875 6325 7187.5 8912.5 22425 administrative expenses 15000 15000 15000 45000 Total cost 21325 22187.5 23912.5 67425 Calculation of manufacturing overhead cost per unit = total cost / 24000 2.875 Budgeted income statement January February March Total Sales 110000 125000 155000 390000 cost of goods sold 42740 48497 59611 150848 Gross profit 67260 76503 95389 239152 selling & admn cost 21325 22188 23913 67425 Net operating income 45935 54315 71477 171727
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