Question

Fredericksen Corporation makes one product and has provided the following information: Budgeted sales, February 8,700 units Raw materials requirement per unit of output 6 pounds Raw materials cost $ 2.00 per pound Direct labor requirement per unit of output 2.9 direct labor-hours Direct labor wage rate $ 21.00 per direct labor-hour Predetermined overhead rate (all variable) $ 10.00 per direct labor-hour Variable selling and administrative expense $ 1.10 per unit sold Fixed selling and administrative expense $ 80,000 per month The estimated cost of goods sold for February is closest to:

Answer 1

Answer:

$886,530

Explanation:

Data provided in the question:

Budgeted sales = 8,700 units

Raw material required per unit of output = 6 pounds

Raw material cost per pound = $2

Direct labor required per unit = 2.9 hours

Direct labor wage rate = $21.00 per direct labor-hour

Predetermined overhead rate = $10

Now,

Total raw material required = 8,700 × 6

= 52,200

Total raw material cost = 52,200 × $2

= $104,400

Total direct labor hours required = 2.9 × 8,700

= 25,230

Total direct labor cost = 25,230 × $21

= $529,830

Total overhead cost = $10 × 25,230

= $252,300

Therefore,

Total cost of goods sold = $104,400 + $529,830 + $252,300

= $886,530