21. Columbia Score Company manufactures scoreboards for athletic events. It expe

Question

21. Columbia Score Company manufactures scoreboards for athletic events. It expects to sell 20,000 scoreboards in 20X2. Beginning finished goods inventory totals 4,000 units and the company has set a targeted ending finished goods inventory of 3,000 units. The scoreboards will sell for $800. There is no expected ending work in process inventory. Direct materials cost for each scoreboard totals $200, while direct labor is $80. Manufacturing overhead is applied at a rate of 75% of the direct labor cost. What is the budgeted cost of goods sold for the year? (a) $7,140,000. (b) $6,460,000. (c) $5,920,000. (d) $6,800,000.

Explanation / Answer

Answer is D . $ 6800,000

The Explanation is as follows:

Cost of Goods per unit :

Material cost per unit   $ 200

Labour cost per unit     $ 80

Overheads @75% of labour cost (80*75% ) $ 60

Cost per unit    (200+80+60 ) = $ 340 per unit

Expected Units sold: 20,000 units

Cost of Goods sold for the year ( 20,000 units@340 ) = $ 6800,000

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