Wesley Power Tools manufactures a wide variety of tools and accessories. One of

Question

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $70. Wesley expects the following unit sales:

Wesley’s ending finished goods inventory policy is 25 percent of the next month’s sales.
      Suppose each handisaw takes approximately .65 hours to manufacture, and Wesley pays an average labor wage of $12.50 per hour.
      Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the housing unit total $3.50 per handisaw.
      Manufacturing overhead for this product includes $63,000 annual fixed overhead (based on production of 24,000 units) and $1.00 per unit variable manufacturing overhead. Wesley’s selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $15,000 per month.

January 2,300 February 2,400 March 3,000 April 2,800 May 2,400 Required 1. Compute the budgeted cost of goods sold for the first quarter. (Round direct material, direct labor and overhead costs per unit to 2 decimal places. Round final answers to the nearest dollar amount.) January February March 1st Quarter Total Budgeted Cost of Goods Sold 2. Compute the budgeted selling and administrative expenses January February March 1st Quarter Total Budgeted Selling and Administrative Expenses 3. Complete the budgeted income statement for the handisaw product for the first quarter. (Round direct material, direct labor and overhead costs per unit to 2 decimal places. Round final answers to the nearest dollar amount.) WESLEY POWER TOOLS Budgeted Income Statement For the Quarter Ending March January February March 1st Quarter Total udgeted Sales Revenue udgeted Cost of Goods Sold Budgeted Gross Profit udgeted Selling and Administrative Expenses Budgeted Net Operating Income

Explanation / Answer

PRODUCTION BUDGET APRIL MAY JUNE QUARTER JULY Budgeted Sales Units 290 340 440 1,070 415 Add: Desired Ending Finished inventory 136 176 166 166 Total Needs 426 516 606 1,236 Less: Beginning Finished Inventory 116 136 176 116 Required Production in units 310 380 430 1,120 BUDGETED MANUFACTURING OVERHEADS APRIL MAY JUNE QUARTER Budgeted Production Units 310 380 430 1120 Variable Manufacturing Cost per unit 0.2 0.2 0.2 0.2 Total Variable Mfg OH 62 76 86 224 Fixed manufacturiing Overheads 750 750 750 2250 Total Manufacturing OH 812 826 836 2474 Less: Depreciation 190 190 190 570 Cash Disbursals for Mfh OH 622 636 646 1904 BUDGETED COST OF GOODS SOLD Jan Feb march QUARTER Budgeted Sales Units 2,300 2,400 3,000 7,700 Cost of Goods sold Material Cost @ $9.50 per unit 21850 22800 28500 73150 labour cost @ $8.125 per unit 18688 19500 24375 62563 Variable Manufacturing Oh 2300 2400 3000 7700 Total variable Cost of Goods sold 42838 44700 55875 143413 Fixed manufacturing OH 5250 5250 5250 15750 Budgeted Cost of Goods sold 48088 49950 61125 159163 BUDGETED SELLING AND ADMIN OH Jan Feb march QUARTER Budgeted Sales Units 2,300 2,400 3,000 7,700 Selling price per unit 70 70 70 70 Budgeted Sales    161,000 168,000 210,000 539,000 Variable Selling OH per unit @6% of sales 9660 10080 12600 32340 Fixed Admin OH 15000 15000 15000 45000 Budgeted Selling and Admin Oh 24660 25080 27600 77340 BUDGETED INCOME STATEMENT Jan Feb march QUARTER Budgeted Sales    161,000 168,000 210,000 539,000 Less: Cost of Goods sold Vvariable 42838 44700 55875 143413 Fixed 5250 5250 5250 15750 Gross margin 112,912 118,050 148,875 379,837 Budgeted selling and admin OH Variable 9660 10080 12600 32340 Fixed 15000 15000 15000 45000 Net Income 88,252 92,970 121,275 302,497

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.