Solution-What is the cost of goods sold

What is the cost of goods sold

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Question - Blossom Company is preparing its budgeted income statement for 2020. Relevant data pertaining to its sales, production, and direct materials budgets are as follows.

Sales. Sales for the year are expected to total 1,000,000 units. Quarterly sales are 18%, 23%, 23%, and 36%, respectively. The sales price is expected to be $40 per unit for the first three quarters and $45 per unit beginning in the fourth quarter. Sales in the first quarter of 2021 are expected to be 10% higher than the budgeted sales for the first quarter of 2020.

Production. Management desires to maintain the ending finished goods inventories at 18% of the next quarter's budgeted sales volume.

Direct materials. Each unit requires 2 pounds of raw materials at a cost of $9 per pound. Management desires to maintain raw materials inventories at 10% of the next quarter's production requirements. Assume the production requirements for first quarter of 2021 are 490,000 pounds.

Blossom budgets 0.2 hours of direct labor per unit, labor costs at $11 per hour, and manufacturing overhead at $17 per direct labor hour. Its budgeted selling and administrative expenses for 2020 are $6,500,000.

Required - What is the cost of goods sold?

Reference no: EM132791609

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What is the cost of goods sold

Reference no: EM132791609

Reference no: EM132791609

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