1. First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct mate

Question

1. First Class, Inc., expects to sell 26,000 pool cues for $14 each. Direct materials costs are $2, direct manufacturing labor is $4, and manufacturing overhead is $0.89 per pool cue. The following inventory levels apply to 2019: Beginning inventory Ending inventory Direct materials 31,000 units 31,000 units Work-in-process inventory 0 units 0 units Finished goods inventory 1,800 units 3,300 units On the 2019 budgeted income statement, what amount will be reported for cost of goods sold?

$201,877

$189,475

$168,805

$179,140

Explanation / Answer

Direct Materials per cue = $2
Direct Labor per cue = $4
Manufacturing Overhead per cue = $0.89

Total Manufacturing Cost per cue = Direct Materials per cue + Direct Labor per cue + Manufacturing Overhead per cue
Total Manufacturing Cost per cue = $2 + $4 + $0.89
Total Manufacturing Cost per cue = $6.89

Number of cues sold = 26,000

Cost of Goods Sold = Total Manufacturing Cost per cue * Number of cues sold
Cost of Goods Sold = $6.89 * 26,000
Cost of Goods Sold = $179,140

So, cost of goods sold of $179,140 would be reported in budgeted income statement

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