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 $40. Wesley expects the following unit sales: January 2,200 February 2,500 March 2,700 April 2,500 May 2,100 Wesley’s ending finished goods inventory policy is 35 percent of the next month’s sales. Suppose each handisaw takes approximately 0.65 hour to manufacture, and Wesley pays an average labor wage of $13.50 per hour. Each handisaw requires two plastic components that Wesley purchases from a supplier at a cost of $3.00 each. The company has an ending direct materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the plastic components total $4.50 per handisaw. Manufacturing overhead for this product includes $66,000 annual fixed overhead (based on production of 24,000 units) and $0.90 per unit variable manufacturing overhead. Wesley’s selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $16,000 per month. Required: Compute the budgeted cost of goods sold for the first quarter. Compute the budgeted selling and administrative expenses for the first quarter. 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 $40. Wesley expects the following unit sales: January 2,200 February 2,500 March 2,700 April 2,500 May 2,100 Wesley’s ending finished goods inventory policy is 35 percent of the next month’s sales. Suppose each handisaw takes approximately 0.65 hour to manufacture, and Wesley pays an average labor wage of $13.50 per hour. Each handisaw requires two plastic components that Wesley purchases from a supplier at a cost of $3.00 each. The company has an ending direct materials inventory policy of 10 percent of the following month’s production requirements. Materials other than the plastic components total $4.50 per handisaw. Manufacturing
Trending now
This is a popular solution!
Step by step
Solved in 5 steps
