Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $44. Wesley expects the following unit sales: January February March April May 2,000 2,200 2,700 2,500 1,900 Wesley's ending finished goods inventory policy is 30 percent of the next month's sales. Suppose each handisaw takes approximately 0.75 hours to manufacture, and Wesley pays an average labor wage of $18 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 each. The company has an ending direct materials inventory policy of 25 percent of the following month's production requirements. Materials other than the housing unit total $4.50 per handisaw. Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley's selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month. Required: 1. Compute the budgeted cost of goods sold for the first quarter. 2. Compute the budgeted selling and administrative expenses for the first quarter. 3. Complete the budgeted income statement for the handisaw product for the first quarter.
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $44. Wesley expects the following unit sales: January February March April May 2,000 2,200 2,700 2,500 1,900 Wesley's ending finished goods inventory policy is 30 percent of the next month's sales. Suppose each handisaw takes approximately 0.75 hours to manufacture, and Wesley pays an average labor wage of $18 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 each. The company has an ending direct materials inventory policy of 25 percent of the following month's production requirements. Materials other than the housing unit total $4.50 per handisaw. Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley's selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month. Required: 1. Compute the budgeted cost of goods sold for the first quarter. 2. Compute the budgeted selling and administrative expenses for the first quarter. 3. Complete the budgeted income statement for the handisaw product for the first quarter.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless
power handisaw. Each handisaw sells for $44. Wesley expects the following unit sales:
January
February
March
April
May
2,000
2,200
2,700
2,500
1,900
Wesley's ending finished goods inventory policy is 30 percent of the next month's sales.
Suppose each handisaw takes approximately 0.75 hours to manufacture, and Wesley pays an average labor wage of $18
per hour.
Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 each. The company has
an ending direct materials inventory policy of 25 percent of the following month's production requirements. Materials
other than the housing unit total $4.50 per handisaw.
Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units)
and $1.20 per unit variable manufacturing overhead. Wesley's selling expenses are 7 percent of sales dollars, and
administrative expenses are fixed at $18,000 per month.
Required:
1. Compute the budgeted cost of goods sold for the first quarter.
2. Compute the budgeted selling and administrative expenses for the first quarter.
3. Complete the budgeted income statement for the handisaw product for the first quarter.
C
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