Country Heather manufactures flower pots. It expects to sell 26,000 pots in 2014
ID: 2425112 • Letter: C
Question
Country Heather manufactures flower pots. It expects to sell 26,000 pots in 2014. The company had enough beginning inventory of direct materials to produce 8,000 pots and wants to maintain an ending direct materials inventory to produce 12,000 pots. Beginning inventory of finished pots totaled 2,000 pots and the company had a desired ending inventory of finished pots of 3,000 pots. The pots sell for $12 each. Direct material cost is $2.50 per pot, direct labor cost is $1.35 per pot, and factory overhead is 85¢ per pot.
1. Determine the budgeted sales for 2014 (in $)
2. Determine the budgeted production for 2014 (in pots)
3. Determine the budgeted cost of goods sold for 2014 (in $)
4. Determine the budgeted cost for DM, DL, & FOH for 2014.
Explanation / Answer
1) Budgeted sales = 26,000*12 per unit = $312,000
2)Budgeted production
3)Budgeted cost per unit
Direct materials 2.50 + direct labor $1.35 + Overhead .85 = $4.7 per unit
total cost of goods sold = 26,000 *$4.70 = $122,200
4) Budgeted cost
Materials 27,000Production + Closing inventory 12,000 - opening inventory 8,000
= 31,000 materials used @ 2.5 per pot == $77,500
Direct labor 27,000 * 1.35 = 36,450
Facotry overhead 27,000 *.85 = 22,950
Sale units 26,000 Add:closing 3,000 Total units 29,000 less:Opening 2,000 Productuon required 27,000