2 Wesley Power Tools manufactures a wide variety of tools and accessories. One o
ID: 2470849 • Letter: 2
Question
2
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
Ans 1 Budgeted Cost of Good Sold January February March 1st Qtr Total Cost of material 23000 25300 31050 79350 Direct Labour $27,000 $29,700 $36,450 $93,150 Manufacturing Overhead Fixed 6000 6000 6000 18000 Variable 2400 2640 3240 8280 Budgeted Cost of Good Sold 58400 63640 76740 198780 Note: Budgeted Cost of Good Sold Total No. of units sold 2000 2200 2700 6900 Cost of material used in units sold 11.5 11.5 11.5 11.5 Cost of material 23000 25300 31050 79350 Variable Overhead per unit 1.2 1.2 1.2 1.2 Variable Overhead 2400 2640 3240 8280 No of hours required per handisaw 0.75 0.75 0.75 0.75 Total No. Of hours 1500 1650 2025 5175 Wage rate per hour $18 $18 $18 $18 Labour Cost $27,000 $29,700 $36,450 $93,150 Ans 2 January February March 1st Qtr Total Sales in units 2000 2200 2700 6900 Sales in value S 88000 96800 118800 303600 Budgeted Selling & Administrative Expenses Selling Expenses (7%* S) 6160 6776 8316 21252 Administrative expenses 18000 18000 18000 54000 Budgeted Selling & Administrative Expenses 24160 24776 26316 75252 Ans 3 Budgeted Income Statement For the 1st Qtr Ending March January $ February March 1st Qtr Total $ Budgeted Sales Revenue 88000 96800 118800 303600 Less: Budgeted Cost of Good Sold 58400 63640 76740 198780 Budgeted Gross Margin 29600 33160 42060 104820 Budgeted Selling & Administrative Expenses 24160 24776 26316 75252 Budgeted Net Income 5440 8384 15744 29568
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