Question

Question 24 Fultz Company has accumulated the following budget data for the year 2017. 1. Sales: 31,230 units, unit selling price $85. 2. Cost of one unit of finished goods: direct materials 1 pound at $5 per pound, direct labor 3 hours at $12 per hour, and manufacturing overhead $8 per direct labor hour. 3. Inventories (raw materials only): beginning, 10,130 pounds; ending, 15,380 pounds. 4. Selling and administrative expenses: $170,000; interest expense: $30,000. 5. Income taxes: 30% of income before income taxes. Prepare a schedule showing the computation of cost of goods sold for 2017. FULTZ COMPANY Computation of Cost of Goods Sold Cost of one unit of finished goods: Direct materials $ Direct labor Manufacturing overhead Total $ Cost of Goods Sold $ Prepare a budgeted multiple-step income statement for 2017. FULTZ COMPANY Budgeted Income Statement $ $

Answer 1

Fultz Company
Computation of Cost of Goods Sold
For the Year Ended December 31, 2017
Cost of one unit of Finished goods:
Direct Materials                [1 pound x $5]	$5
Direct labor                      [3 hours x $2]	$36
Manufacturing Overhead [3 hours x $8]	$24
Total	$65
Cost of Goods Sold    [31,230 units x $65]	$2,029,950

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Fultz Company
Budgeted Income Statement
For the Year Ended December 31, 2017
Sales                                                     [31,230 x $85]	$2,654,550
Cost of Goods sold	$2,029,950
Gross Profit                                         [Sales - Cost of goods sold]	$624,600
Selling and Administrative Expenses	$170,000
Operating Income                                [Gross profit - Selling and Administrative Expenses]	$454,600
Interest Expense	$30,000
Income Before Income Taxes             [Operating Income - Interest Expense]	$424,600
Income Tax Expense                                           [424,600 x 30%]	$127,380
Net Income                                         [Income before income taxes - Income expense]	$297,220