Question

Jedi, Inc., expects to sell 10,000 lightsabres for $24.00 each.

Costs per unit are as follows:

• Direct materials costs are $6.00
• Direct manufacturing labor is $4.00
• Manufacturing overhead is $0.80 per lightsabre.

The following inventory levels apply to 2019:

                                                 Beginning inventory      Ending inventory

      Direct materials                                  24,000 units                24,000 units

      Work-in-process inventory                         0 units                       0 units

      Finished goods inventory                      2,000 units                 2,500 units

What will be the budgeted cost of goods sold for 2019?

Answer 1

Direct materials costs per unit = $6

Direct manufacturing labor per unit = $4

Manufacturing overhead per unit = $0.80

Total manufacturing cost per unit = Direct materials costs per unit + Direct manufacturing labor per unit + Manufacturing overhead per unit

= 6 + 4 + 0.80

= $10.80

Number of units sold = 10,000

Finished goods inventory, beginning = 2,000 units

Finished goods inventory, ending = 2,500 units

Number of units purchased = Number of units sold + Finished goods inventory, ending - Finished goods inventory, beginning

= 10,000 + 2,500 - 2,000

= 10,500

Schedule of cost of goods sold

Direct material cost (10,500 x 6)	63,000
Direct manufacturing labor cost (10,500 x 4)	42,000
Manufacturing overhead (10,500 x 0.80)	8,400
Total manufacturing cost	113,400
Finished goods inventory, beginning (2,000 x 10.8)	21,600
Cost of goods available for sale	135,000
Finished goods inventory, ending (2,500 x 10.8)	-27,000
Cost of goods sold	$108,000

Budgeted cost of goods sold for 2019 = $108,000