Question

Fosnight Enterprises prepared the following sales? budget:

Month	Budgeted Sales
March	$ 9 comma 000$9,000
April	$ 15 comma 000$15,000
May	$ 13 comma 000$13,000
June	$ 12 comma 000$12,000

The expected gross profit rate is

2020?%

and the inventory at the end of February was

$ 12 comma 000$12,000.

Desired inventory levels at the end of the month are

1010?%

of the next? month's cost of goods sold.

What is the budgeted cost of goods sold for? May?

Brittany Furniture manufactures two? products: Futons and Recliners. The following data are? available:

	Futons	Recliners
Sales price	$ 550$550	$ 750$750
Variable costs	$ 360$360	$ 425$425

The company can manufacture

33

futons per machine hour and

11

recliners per machine hour. The? company's production capacity is

9 comma 8009,800

machine hours per month.

What is the contribution margin per machine hour for? recliners?

Answer 1

Solution:
1st	The budgeted cost of goods sold for? May = $10,400
Working Notes:
	Cost of goods sold = Sales - Gross profit
	=$13,000 - (20% x $13,000)
	=10,400
	The budgeted cost of goods sold for? May = $10,400
2nd.	The contribution margin per machine hour for? recliners =$3,575
Working Notes:
		Futons	Recliners
	Sales price	$550	$750
	Less: Variable costs	($360)	($425)
	Contribution margin per unit	$190	$325
	No. of units manufactured in 1 mhrs	33	11
	Contribution margin for 1hour	$6,270	$3,575
	[ Contribution margin per unit x no. of units produced in 1 m/c hours]
Please feel free to ask if anything about above solution in comment section of the question.