Question

Suppose White Company manufactures chairs. One model is the executive chair that sells for $220. White Company projects sales of 500 chairs per month. The production costs are as follows: Direct materials per chair $60 Direct labor per chair 30 Manufacturing overhead per chair 20 White Company has 30 chairs in inventory at the beginning of January and wants to have an ending inventory equal to 30% of next month’s sales. Selling and administrative expenses for this product line are $20,000 per month. What is the budgeted cost of goods sold for January?

Answer 1

Answer:

$55,000

Explanation:

we must determine the total budgeted manufacturing cost per unit = direct materials per chair x direct labor per chair + variable manufacturing overhead cost per chair = $60 + $30 + $20 = $110 per unit

total budgeted sales = 500 units sold in January

budgeted cots of goods sold = 500 units x $110 per unit = $55,000