Question
Horngren's Accounting Eleventh Edition Refer to the budgets prepared in E22-25. Determine the cost per kit to manufacture the toys. Gordon projects sales to 5800,
Horngren's Accounting Eleventh Edition
Refer to the budgets prepared in E22-25. Determine the cost per kit to manufacture the toys. Gordon projects sales to 5800, 5600, 5700, 5400 for the next four quarters. Prepare a cost of goods sold budget for the year. Gordon has 2,000 kits in beginning inventory at a cost of $200,000.
FROM E22-25
Gordon, Inc. makes toys and projects production to be 6100, 5900, 6000, and 5500 for the next four quarters. Direct materials are $8 per kit. Beginning Raw Material Inventory is $20,000 and the company desires to end each quarter with 25% of the material needed for the next two quarter's production. Direct Materials needed for production in the First Quarter of the following year is $45,000. Gordon desires a balance of $25,000 in Raw Materials Inventory at the end of the fourth quarter. Each kit requires 1.3 hours of direct labor at an average cost of $30 per hour. Each kit requires 1.25 machine hours. Manufacturing overhead is allocated using machine hours as the allocation base. Variable overhead is $50 per kit and fixed overhead is $30,000 in the first two quarters and $32,000 in the third and fourth quarter.
Prepare a cost of goods sold budget for the year. Gordon has no kits in beginning inventory. Round amounts to two decimal places. | |||||||||
Solution: | |||||||||
First calculate the total projected manufacturing cost per kit | |||||||||
GORDON, INC. | |||||||||
Cost of Goods Sold Budget | |||||||||
For the Year Ended December 31 | |||||||||
First Quarter | Second Quarter | Third Quarter | Fourth Quarter | Total | |||||
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