The Bay Manufacturing Company expects to sell 25,000 pens at $26 each. The direct material costs are $5 and direct manufacturing labor is $9, and manufacturing overhead is $1.80 per pen
The following inventory levels apply to 2012:
Beginning Inventory Ending Inventory
Direct materials 29,000 units 29,000 units
Work-in-process inventory 0 units 0 units
Finished goods inventory 3,000 units 3,500 units
On the 2013 budgeted income statement, what amount will be reported for sales? How many pencils need to be produced in 2013? Compute the amount of cost of goods sold on the 2013 budgeted income statement.
What will be an ideal response?
The reported sales of $650,000 and 25,500 pens need to be produced in 2013. The cost of goods sold on the 2013 income statement is $920,000.
Explanation: Sales [(25,000 × $26)] = $650,000
Number of pens produced in 2013 [(25,000 + 3,500 - 3,000 )] = 25,500 pens
Cost of goods sold [(25,000 × ($5 + $9 + $1.80)] = $395,000
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