Answered: Cost of Goods Sold Budget

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question

3.2

Cost of Goods Sold Budget

Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs:

Direct materials	$1.65
Direct labor	0.45
Variable overhead	0.70
Fixed overhead	1.80
Total unit cost	$4.60

For the coming year, Play-Disc expects to make 400,000 plastic discs, and to sell 390,000 of them. Budgeted beginning inventory in units is 20,000 with unit cost of $4.60. (There are no beginning or ending inventories of work in process.)

2. Prepare a cost of goods sold budget for Play-Disc for the year.
Play-Disc
Cost of Goods Sold Budget
For the Year
Total manufacturing cost
Cost of goods sold
3. What if the beginning inventory of finished goods was $91,200 (for 20,000 units)? How would that affect the cost of goods sold budget?
(Assume Play-Disc uses the FIFO method.)
The cost of goods sold would
to $

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