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

Budgeted Cost of goods sold Direct materials 20000*200 4000000 Direct labor 20000*80 1600000 manufacturing overhead 1600000*75% 1200000 Option D is correct 6800000 Direct materials (4000+20000-3000) 21000*200 4200000 Option D is correct

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