4) materials l manufa Vance Electronies expects to make 100,000 Bluetooth speake

Question

4) materials l manufa Vance Electronies expects to make 100,000 Bluetooth speakers during 2014. Direct unit are estimated at S12, and direct labor cost is expected to be $4 per unit. The tota overhead for the year is budgeted at $850,000. Required: 1) Calculate the amount of overhead that should be allocated to each speaker during the year. 2) Assume that, during the month of October, Vance made and sold 8,000 speakers. What wo cost of goods sold be for the month? 3) Assume that the company sells the speakers at cost plus 40% of cost. what would be the sel price for each speaker?

Explanation / Answer

1) Amount of overhead shoule be allocated to each speaker :

Overhead allocated to each speaker = 850000/100000 = 8.50 per speaker

2) Calculate cost of goods sold :

3) Sale price of speaker = cost+(40% of cost)

                                  = 24.50+(24.50*40%)

Sale price of speaker = 34.30

Direct material 12 Direct labour 4 Manufacturing overhead (8000*8.5) 8.50 Cost per speaker 24.50 Speaker sold 8000 Cost of goods sold 196000

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