WellWheats, Inc. produces breakfast cereal and sells each box, or unit, for $7. The company is projecting sales of 1,000 units for the month of March. The total cost of producing one unit includes $2 for direct materials, $1 for direct labor, and $0.50 for manufacturing overhead. Calculate the cost of goods sold for the month of March.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
We discuss how to prepare the different component budgets of the
operating budget, including the sales, production, direct materials,
direct labor,
selling and administrative expense budgets. We also discuss how
to use information from all of these operating budgets to prepare a
Knowledge Check 05
WellWheats, Inc. produces breakfast cereal and sells each box, or unit, for $7.
The company is projecting sales of 1,000 units for the month of March. The total
cost of producing one unit includes $2 for direct materials, $1 for direct labor,
and $0.50 for manufacturing overhead.
Calculate the cost of goods sold for the month of March.
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