Fultz Company has accumulated the following budget data for the year 2017. 1. Sa

Question

Fultz Company has accumulated the following budget data for the year 2017.
1. Sales: 31,330 units, unit selling price $88. 2. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $7 per direct labor hour. 3. Inventories (raw materials only): beginning, 10,220 pounds; ending, 15,410 pounds. 4. Selling and administrative expenses: $170,000; interest expense: $30,000. 5. Income taxes: 30% of income before income taxes.

Explanation / Answer

1) FULTZ COMPANY

Computation of Cost of goods sold

For the year ending December 31, 2017 (Amounts in $)

Raw material consumed = 31,330 units*1 pound per unit = 31,330 pounds

Raw Material Purchased = Closing Inventory+Raw Material Consumed-Opening Inventory

= 15,410 pounds+31,330 pounds-10,220 pounds = 36,520 pounds

2)   FULTZ COMPANY

Budgeted Income Statement

For the Year Ending December 31, 2017 (Amounts in $)

  

Cost of one unit of finished goods: Direct materials (1 pound*$5 per pound) 5 Direct Labor (3 hours*$12 per hour) 36 Manufacturing overhead (3 hours*$7 per hour) 21 Total cost per unit (A) (5+36+21) 62 Units Sold (B) 31,330 units Cost of goods sold (A*B) 1,942,460

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