Question

1.Mason, Inc. has prepared the following budgets for May. In May, budgeted production is 1,000 units, budgeted sales is 1,200 units, and direct materials inventory unit costs will stay constant.

Direct materials	$	8.25	per unit
Direct labor	$	12.60	per unit
Variable manufacturing overhead	$	8.40	per unit
Fixed manufacturing overhead	$	8,400

What is budgeted cost of goods sold for May?

Multiple Choice

• $37,650

• $36,171

• $45,180

• $43,500

2. Nino has forecast sales for the next three months as follows: July 5,000 units, August 7,000 units, September 8,500 units. Nino's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 2,500 units. Selling and administrative costs are budgeted to be $25,000 per month plus $5 per unit sold. What are budgeted selling and administrative expenses for September?

Multiple Choice

• $67,500

• $86,800

• $41,800

• $39,000

Answer 1

1.

Schedule of cost of goods sold

Direct material cost (1,000 x 8.25)	8,250
Direct labor cost (1,000 x 12.60)	12,600
variable manufacturing overhead (1,000 x 8.40)	8,400
Fixed manufacturing overhead	8,400
Total manufacturing cost	37,650
Beginning inventory of finished goods (200 x 29.25)	5,850
Cost of goods sold	$43,500

Cost of goods sold = $43,500

Fourth option is the correct option

Since production is of 1,000 units and budgeted sales is 1,200 units, hence beginning inventory of finished goods will be 200 units .

Unit product cost = Direct material + Direct labor + variable manufacturing overhead

= 8.25 + 12.60 + 8.40

= $29.25

2.

Selling and administrative expense = 25,000 + 5 x Number of units sold

Sales in September = 8,500 units

Hence, Budgeted selling and administrative expense for Sept = 25,000 + 5 x 8,500

= 25,000 + 42,500

= $67,500

First option is the correct option