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 $50. Wesley expects the following unit sales: 2,300 2,700 2,800 2,800 2,000 January March April May Wesley's ending finished goods inventory policy is 30 percent of the next month's sales. Suppose each handisaw takes approximately .35 hours to manufacture, and Wesley pays an average labor wage of $15.50 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $5.00 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 $4.50 per handisaw Manufacturing overhead for this product includes $69,000 annual fixed overhead (based on production of 24,000 units) and S.90 per unit variable manufacturing overhead. Wesley's selling expenses are 5 percent of sales dollars, and administrative expenses are fixed at $16,000 per month. 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.) anuary 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

Explanation / Answer

1 Unit sales 2300 2700 2800 January February March 1st Quarter Total Raw material at $5+$4.5 $    21,850.00 $    25,650.00 $    26,600.00 Direct labor at 0.35 Hr x $15.50 per hr        14,647.50        15,190.00        12,477.50 Manufacturing overhead Variable at 9 per unit        20,700.00        24,300.00        25,200.00 Fixed at (69000/24000) per unit           6,612.50           7,762.50           8,050.00 Budgeted Cost of goods sold $    63,810.00 $          72,903 $          72,328 $          209,040.00 2 January February March 1st Quarter Total Sales Revenue at $50 $ 115,000.00 $ 135,000.00 $ 140,000.00 Selling expenses at 5% 5750 6750 7000 Administrative expenses 16000 16000 16000 Budgeted selling and Administrative Expenses $    21,750.00 $    22,750.00 $    23,000.00 $            67,500.00 WESLEY POWER TOOLS Budgeted Income Statement For the quarter Ending March January February March 1st Quarter Total Sales Units 2300 2700 2800 7800 Budgeted Sales Revenue at $50 $ 115,000.00 $ 135,000.00 $ 140,000.00 $          390,000.00 Less: Budgeted cost of goods sold $    63,810.00 $    72,902.50 $    72,327.50 $          209,040.00 Budgeted Gross Profit $    51,190.00 $    62,097.50 $    67,672.50 $          180,960.00 Less: Budgeted Selling and adinistrative expenses $    21,750.00 $    22,750.00 $    23,000.00 $            67,500.00 Budgeted Net Operating Income $    29,440.00 $    39,347.50 $    44,672.50 $          113,460.00

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