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Refer to Cornerstone Exercise 8.6. Required: 1. Calculate the total budgeted cost of units produced for Play-Disc for the coming year. Show the cost of direct materials, direct labor, and overhead. 2. Prepare a cost of goods sold budget for Play-Disc for the year. 3. What if the beginning inventory of finished goods was $75,200 (for 16,000 units)? How would that affect the cost of goods sold budget? (Assume Play-Disc uses the FIFO method.) Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs: For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of $4.75. (There are no beginning or ending inventories of work in process.) Required: 1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.

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Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663

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Chapter
Section
BuyFindarrow_forward

Cornerstones of Cost Management (C...

4th Edition
Don R. Hansen + 1 other
Publisher: Cengage Learning
ISBN: 9781305970663
Chapter 8, Problem 7CE
Textbook Problem
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Refer to Cornerstone Exercise 8.6.

Required:

  1. 1. Calculate the total budgeted cost of units produced for Play-Disc for the coming year. Show the cost of direct materials, direct labor, and overhead.
  2. 2. Prepare a cost of goods sold budget for Play-Disc for the year.
  3. 3. What if the beginning inventory of finished goods was $75,200 (for 16,000 units)? How would that affect the cost of goods sold budget? (Assume Play-Disc uses the FIFO method.)

Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs:

Chapter 8, Problem 7CE, Refer to Cornerstone Exercise 8.6. Required: 1. Calculate the total budgeted cost of units produced

For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of $4.75. (There are no beginning or ending inventories of work in process.)

Required:

  1. 1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year.
  2. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.

1.

To determine

Compute the total budgeted cost of units produced for PD Company for the coming year (show the cost of direct materials, direct labor and overhead).

Explanation of Solution

Compute the total budgeted cost of units produced for PD Company for the coming year (show the cost of direct materials, direct labor and overhead):

ParticularsAmount ($)
Budgeted direct materials501,000
Budgeted direct labor168,000
Budgeted overhead756,00
Total budgeted manufacturing cost$1,425,000

Table (1)

Therefore the total budgeted manufacturing cost is $1,425,000.

Working note 1:

Calculate the cost of budgeted direct materials:

Cost of budgeted direct materials = (Expected number of units produce× Direct material unit cost)=(300,000units×$1.67)=$501,000

Working note 2:

Calculate the cost of budgeted direct labor:

Cost of budgeted direct labor= (Expected number of units produce× Direct labor unit cost)=(300,000units×$

2.

To determine

Prepare a cost of goods sold budget for PD Company for the year.

3.

To determine

Explain how the change in beginning inventory of finished goods ($75,200) affects the cost of goods sold budget.

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Chapter 8 Solutions

Cornerstones of Cost Management (Cornerstones Series)
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