EFE company manufactures and sells boats. The company’s management accountant gathered the following data to prepare budgets for 2012; Direct Materials Requirements Material A 12 metres per boat Material B 14 square meter per boat Inventory data of Direct Materials are; Beginning Inventory Material A 5.000 meters Material B 2.400 square meters Inventory data of Finished Goods are; Beginning Inventory Target Ending Inventory Boats 1.000 units 3.000 units Moreover, unit purchase price of material A was $60 and unit purchase price of material B was $10. For the coming year 2021 it is expected that unit purchase price of material A will be $64 and unit purchase price of material B will not change. The company uses FIFO inventory method. Labor hours required to produce 1 boat is 3 hours and the company plans to pay $12 per hour. Company budgeted manufacturing overhead rate of $6 per labor hour. Finally, the company expects to sell 4000 boats in 2021 at an average unit selling price of $6000. Please determine COGM per unit for 2021, prepare COGS budget and compute the gross profit.

Principles of Accounting Volume 2

19th Edition

ISBN:9781947172609

Author:OpenStax

Publisher:OpenStax

Chapter7: Budgeting

Section: Chapter Questions

Problem 3PB: TIB makes custom guitars and prepared the following sales budget for the second quarter It also has...

See similar textbooks

Related questions

Concept explainers

Topic Video

Question

EFE company manufactures and sells boats. The company’s management accountant gathered the following data to prepare budgets for 2012;

Direct Materials Requirements

Material A 12 metres per boat

Material B 14 square meter per boat

Inventory data of Direct Materials are;

	Beginning Inventory
Material A	5.000 meters
Material B	2.400 square meters

Inventory data of Finished Goods are;

	Beginning Inventory	Target Ending Inventory
Boats	1.000 units	3.000 units

Moreover, unit purchase price of material A was $60 and unit purchase price of material B was $10. For the coming year 2021 it is expected that unit purchase price of material A will be $64 and unit purchase price of material B will not change. The company uses FIFO inventory method. Labor hours required to produce 1 boat is 3 hours and the company plans to pay $12 per hour. Company budgeted manufacturing overhead rate of $6 per labor hour.

Finally, the company expects to sell 4000 boats in 2021 at an average unit selling price of $6000.

Please determine COGM per unit for 2021, prepare COGS budget and compute the gross profit.

Expert Solution

Step by step

Solved in 3 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions