Wesley Power Tools manufactures a wide variety of tools and accessories. One of
ID: 2470594 • 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 $44. Wesley expects the following unit sales:
January
2,000
February
2,200
March
2,700
April
2,500
May
1,900
Wesley’s ending finished goods inventory policy is 30 percent of the next month’s sales.
Suppose each handisaw takes approximately 0.75 hours to manufacture, and Wesley pays an average labor wage of $18 per hour.
Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 each. The company has an ending raw materials inventory policy of 25 percent of the following month’s production requirements. Materials other than the housing unit total $4.50 per handisaw.
Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley’s selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month.
Required:
1.
Compute the budgeted cost of goods sold. (Do not round your intermediate calculations.)
January
February
March
1ST Quarter Total
Busgeted Cost of Goods Sold
2.
Compute the budgeted selling and administrative expenses.
January
February
March
1ST Quarter Total
Busgeted Selling and Administrative Expenses
3.
Complete the budgeted income statement for the handisaw product for the first quarter. (Do not round your intermediate calculations.)
Wesley Power Tools
Budgeted Income statement
Fort he Quarter Ending March
January
February
March
1st Quarter Total
Budgeted Sales Revenue
Budgeted Cost of Good Sold
Budgeted Gross Profit
Budgeted Selling Administrative Expenses
Budgeted Net Operating Income
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 $44. Wesley expects the following unit sales:
Explanation / Answer
Selling price 44 Jan Feb March April May Unit sales 2000 2200 2700 2500 1900 Ending goods 660 810 750 570 0 cost to Manufacture: hours 0.75 labor wage $18.00 per hr Labor cost per unit $13.50 per unit Raw material cost 7 Other raw material 4.5 Total direct material 11.5 per unit Manufacturing overheads: Fixed 72000 units 27000 Per unit Fixed cost 2.666666667 Variable Man overheads 1.2 Selling expenses 3.08 per unit Fixed Admin 18000 1) cost of goods sold: DM 11.5 DL $13.50 Variable overheads 1.2 Cost per unit 26.2 Jan Feb March Quarter Units sold 2000 2200 2700 6900 cost per unit 26.2 26.2 26.2 26.2 Cost of goods sold 52400 57640 70740 180780 2) budgeted selling and administrative expenses Jan Feb March Quarter Units sold 2000 2200 2700 6900 Selling expenses per unit 3.08 3.08 3.08 3.08 Total selling exp 6160 6776 8316 21252 Adming exp 18000 18000 18000 54000 Bud selling and admin exp 24160 24776 26316 75252 3) income statement Jan Feb March Quarter Bud sales revneue 88000 96800 118800 303600 Cost of goods sold 52400 57640 70740 180780 Budgeted Gross Profit 35600 39160 48060 122820 Budgeted Selling Administrative Expenses 24160 24776 26316 75252 Budgeted Net Operating Income 11440 14384 21744 47568
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