Question

Dont answer in Picture

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

Direct material cost = Pound per unit x Cost per unit x Number of units

= 2 x 5 x 30,000

= $300,000

Direct labor cost = Direct labor hour per unit x Number of units x Direct labor rate

= 3 x 30,000 x 15

= $1,350,000

Manufacturing overhead = Direct labor hour per unit x Number of units x Overhead rate

= 3 x 30,000 x 5

= $450,000

a.

Schedule of Cost of Goods Sold
Direct materials	300,000
Direct labor	1,350,000
Manufacturing overhead	450,000
Cost of goods sold	$2,100,000

b.

Budgeted Income Statement for 2014
Sales (30,000 x 85)	2,550,000
Cost of goods sold	-2,100,000
Gross profit	450,000
Selling and administrative expense	-200,000
Operating profit	250,000
Income tax expense (250,000 x 30%)	-75,000
Net income	$175,000

Kindly give a positive rating if you are satisfied with this solution and please ask if you have any query.

Thanks