Question

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Q6. Dalby Company has accumulated the following budget data for the year 2014.

1. Sales: 30,000 units, unit selling price $85.

2. Cost of one unit of finished goods: direct materials 2 pounds at $5 per pound, direct labor 3 hours at $15 per hour, and manufacturing overhead $5 per direct labor hour.

3. Inventories (raw materials only): beginning, 10,000 pounds; ending, 15,000 pounds.

4. Selling and administrative expenses: $200,000.

5. Income taxes: 30% of income before income taxes.

Instructions

(a) Prepare a schedule showing the computation of cost of goods sold for 2014.

(b) Prepare a budgeted income statement for 2014.

Answer 1

DALBY COMPANY
Schedule of Cost of goods sold
For the Year Ending December 31, 2014
DirectMaterial 30000*2*5	$ 3,00,000.00
Direct Labor 30000*3hr*15	$13,50,000.00
Manufacturing overhead 30000*3*5	$ 4,50,000.00
Cost of goods sold	$21,00,000.00

DALBY COMPANY
Budgeted Income Statement
For the Year Ending December 31, 2014
Sales	$25,50,000.00
Less Cost of goods sold	$21,00,000.00
Gross Profit	$ 4,50,000.00
LessSelling and administrative expenses	$ 2,00,000.00
Profit before Tax	$ 2,50,000.00
Less IncomeTax	$     75,000.00
Profit After Tax	$ 1,75,000.00