lem 23-1 mine budgeted of goods sold; re operating Joyce Corporation prepares mo

Question

lem 23-1 mine budgeted of goods sold; re operating Joyce Corporation prepares monthly operating and financial budgets. The operatim June and July are based on the following data: Units Produced ets (L.O. 4) Units Sold June July 400,000 360,00 360,000 400,000 All sales are at $30 per unit. Direct materials, direct labor, and variable manufacturing overhead are estimated at $3, $6, and $3 per unit, respectively. Total fixed manufacturing overhead is budgeted at $1,080,000 per month. Selling and administrative expenses are budgeted at $1,200,000 pl 10% of sales, while federal income taxes are budgeted at 40% of income before federal income taxes. The inventory at June I consists of 200,000 units with a cost of $17.10 each. Required a. Prepare monthly budget estimates of cost of goods sold assuming that FIFO inventory procedure is used

Explanation / Answer

For June :-

Production = 400000 units

Materials Cost = $3 per unit

Direct Labor Cost = $6 per unit

Variable Manuf. Overhead = $3 per unit

Fixed Manuf. Overhead = $1080000 / 400000 = $2.7 per unit

Production Cost per unit = $3 + $6 + $3 + $2.7 = $14.7 per unit

Cost of Goods Sold Calculation :-

For July :-

Production = 360000 units

Materials Cost = $3 per unit

Direct Labor Cost = $6 per unit

Variable Manuf. Overhead = $3 per unit

Fixed Manuf. Overhead = $1080000 / 360000 = $3 per unit

Production Cost Per Unit = $3 + $6 + $3 + $3 = $15 per unit

Beginning Inventory Balance (200000*$17.10) $3420000 Add : Cost of Goods Produced (400000*$14.7) $5880000 Cost of Goods Available for Sale $9300000 Less : Ending Inventory Balance ((400000-(360000-200000))*$14.7) ($3528000) Cost Of Goods Sold 5772000

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