P7-1: determine budgeted cost of goods sold; prepare operating budgets

Joyce Corporation Prepares Monthly Operating and financial budgets. The operating udgets for June and July are abased on the following data:

June: Units produced: 400,000 ; Units sold: 360,000

July: Units produced: 360,000 ; Units sold: 400,000

All sales are at $30 per unit. Direct Materials ($3 per unit), direct labor ($6 per unit); and variable manufacturing overhead ($3 per unit) are estimated at $3, $6, and $3 respectively. Total fixed manufacturing overhead is budgeted at $1,080,000 per month. Selling and administrative expenses are budgeted at $1,200,000 plus 10% of sales, while Federal income taxes are budgeted at 40% of income before federal income taxes. The inventory at June 1 consists of 200,000 units with a cost of $17.10 each.

A. Prepare monthly budget Estimates of Cost of Goods Sold assuming that FIFO inventory procedure is used

B. Prepare planned operating budgets for June and July