Zen Bach Company has accumulated the following budget data for the year 2016. 1.

Question

Zen Bach Company has accumulated the following budget data for the year 2016.

1.   Sales: 60,000 units, unit selling price $50.

2.   Cost of one unit of finished goods: Direct materials 2 pounds at $5 per pound, direct labor 1.5 hours at $10 per hour, and manufacturing overhead $6 per direct labor hour.

3.   Inventories (raw materials only): Beginning, 20,000 pounds; ending, 30,000 pounds.

4.   Raw materials cost: $5 per pound.

5.   Selling and administrative expenses: $320,000.

6.   Income taxes: 30% of income before income taxes.

Instructions

(a) Prepare a schedule showing the computation of cost of goods sold for 2016.

(b) Prepare a budgeted income statement for 2016.

Explanation / Answer

(a) Prepare a schedule showing the computation of cost of goods sold for 2016.

(b) Prepare a budgeted income statement for 2016.

Direct material per unit (2*5) 10 Direct labour per unit (1.5*10) 15 Manufacturing overhead per unit (6*1.5) 9 Total cost per unit 34 Unit sold 60000 Cost of goods sold 2040000

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