The company expects to sell 7,200 bottles of SlickTone in the first quarter, 6,2
ID: 2446260 • Letter: T
Question
The company expects to sell 7,200 bottles of SlickTone in the first quarter, 6,200 in the second quarter, 10,900 in the third quarter, and 8,900 in the fourth quarter.
A bottle of SlickTone requires 5 ounces of Chemical A and 3.5 ounces of Chemical B.
For the first, second, and third quarters of 2015, the desired ending inventory of finished goods is equal to 9 percent of next quarter’s sales, whereas the desired ending inventory for material is 13 percent of next quarter’s production requirements.
There are 1,700 bottles of SlickTone, 4,900 ounces of Chemical A, and 1,600 ounces of Chemical B on hand at the beginning of the first quarter.
At the end of the fourth quarter, the company must have 1,000 bottles of SlickTone, 8,600 ounces of Chemical A, and 3,900 ounces of Chemical B to meet its needs in the first quarter of 2016.
The cost of Chemical A is $1.00 per ounce, the cost of Chemical B is $0.14 per ounce, and the selling price of SlickTone is $14 per bottle.
The cost of direct labor is $0.60 per bottle, and the cost of variable overhead is $0.80 per bottle. Fixed manufacturing overhead is $2,800 per quarter.
Variable selling and administrative expense is 4 percent of sales and fixed selling and administrative expense is $2,900 per quarter.
1: Prepare a material purchases budget for each quarter of 2015 for chemical A.
DONE - WORK DONE ALREADY, SHOWN BELOW.
2: Prepare a material purchases budget for each quarter of 2015 for chemical B.
DONE - WORK DONE ALREADY, SHOWN BELOW.
3. Prepare a budgeted income statement for each quarter of 2015 (ignore taxes).
NEED HELP - WORK DONE ALREADY, SHOWN BELOW.
Chemical A Quarter 1 Quarter 2 Quarter 3 Quarter 4 Year produced 6058 6623 10720 9099 32500 hemical A per unit hemical A required for production Desired ending inventory of Chemical A 30290 33115 53600 45495 162500 6968 5914.4 8900 54395 5914.4 48480.7 4305 8900 34595 40083 59514.4 171400 Beginning inventory of chemical A 4900 4305 6968 4900 be purchased 29695 35778.1 52546.4 166500 nce chases of chemical A 29695 35778.05 52546.351 48480.65 166500Explanation / Answer
Answer: As required the variable cost of goods sold (rest others are not required not needed as per the asker)
Cost per unit: Material: Chemical A Chemical B Total Per bottle No of ounces per unit 5 3.5 Cost of Chemical A 1 0.14 5 0.49 5.49 Direct Labor 0.6 variable overhead 0.8 Total variable cost per unit 6.89