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Chapter 22: Q25E (page 1234)

Preparing an operating budget—cost of goods sold budget

Refer to the budgets prepared in Exercise E22-24. Determine the cost per kit to manufacture the model airplane kits. Grady projects sales of 100, 150, 100, and 200 kits for the next four quarters. Prepare a cost of goods sold budget for the year. Grady has no kits in beginning inventory. Round amounts to two decimal places.

Short Answer

Expert verified

Answer

The total budgeted cost of goods sold is $3.025

Step by step solution

01

Calculation of cost per unit


Amount ($)

Direct materials cost per kit (4 ounce per kit x $1/Ounce)

$4

Direct labor cost per kit (0.10 hour per kit x $10 per direct labor hour)

$1

Manufacturing overhead cost per kit (0.10 hour per kit x$5/DLHr)

$0.5

Total projected manufacturing cost per kit

$5.5

02

Preparation of cost of goods sold budget


Quarter 1

Quarter 2

Quarter 3

Quarter 4

Projected sales of kits

100

150

100

200

projected manufacturing cost per kit

$5.5

$5.5

$5.5

$5.5

Total budgeted cost of goods sold

$550

$825

$550

$1,100

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Most popular questions from this chapter

Connor Company began operations on January 1 and has projected the following selling and administrative expenses:

Rent Expense $ 1,000 per month, paid as incurred

Utilities Expense 500 per month, paid in month after incurred

Depreciation Expense 300 per month

Insurance Expense 100 per month, 6 months prepaid on January 1

Determine the cash payments for selling and administrative expenses for the first three months of operations.

What are the two types of manufacturing overhead? How do they affect the manufacturing overhead budget calculations?

Preparing a financial budget—budgeted income statement and balance sheet

Ballentine Company has the following post-closing trial balance on December 31, 2018:

The company’s accounting department has gathered the following budgeting information for the first quarter of 2019:

Budgeted total sales, all on account $ 305,500 Budgeted direct materials to be purchased and used 40,000 Budgeted direct labor cost 12,500 Budgeted manufacturing overhead costs: Variable manufacturing overhead 2,600 Depreciation 800 Insurance and property taxes 1,100 Budgeted cost of goods sold 71,300 Budgeted selling and administrative expenses: Salaries expense7,000 Rent expense 3,500 Insurance expense 2,000 Depreciation expense 350 Supplies expense 3,055 Budgeted cash receipts from customers 263,500 Budgeted income tax expense 44,000 Budgeted purchase and payment for capital expenditures

(additional equipment) 34,000

Additional information:

a. Direct materials purchases are paid 50% in the quarter purchased and 50% in the next quarter.

b. Direct labor, ma following budgeted income statement manufacturing overhead, selling and administrative costs, and income tax expense are paid in the quarter incurred.

c. Accounts payable at December 31, 2018 are paid in the first quarter of 2019. Requirements

1. Prepare Ballentine Company’s budgeted income statement for the first quarter of 2019.

2. Prepare Ballentine Company’s budgeted balance sheet as of March 31, 2019.

How is the predetermined overhead allocation rate determined?

What are the three sections of the cash budget?
See all solutions

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