Percy's Pickled Snacks produces several types of pickled vegetables.The company budgets for each quarter in the last month of the previous quarter.In early March,Percy is preparing the budget for pickled beets.Budgeted sales are 12,000 jars for April,16,000 jars for May,and 19,000 jars for June.Each jar requires 1.2 pounds of beets.The pickling process takes 60 minutes for 20 jars.Because pressurized cooking is used,the processing is monitored by an employee at all times.Each jar of pickled beets sells for $15.00. Percy requires ending Finished Goods inventory equal to 25% of the following month's sales.Other information is as follows:
What is Percy's cost of goods sold budget for April?
A)$150,150
B)$138,600
C)$120,900
D)$111,600

Question

Percy's Pickled Snacks produces several types of pickled vegetables.The company budgets for each quarter in the last month of the previous quarter.In early March,Percy is preparing the budget for pickled beets.Budgeted sales are 12,000 jars for April,16,000 jars for May,and 19,000 jars for June.Each jar requires 1.2 pounds of beets.The pickling process takes 60 minutes for 20 jars.Because pressurized cooking is used,the processing is monitored by an employee at all times.Each jar of pickled beets sells for $15.00. Percy requires ending Finished Goods inventory equal to 25% of the following month's sales.Other information is as follows:
 What is Percy's cost of goods sold budget for April?
A)$150,150 
B)$138,600 
C)$120,900 
D)$111,600

Quizplus · Accepted Answer

Step 1: Calculate the total pounds of beets needed for production:
12,000 jars x 1.2 pounds/jar = 14,400 pounds of beets

Step 2: Calculate the total cost of beets:
14,400 pounds x $0.40/pound = $5,760

Step 3: Calculate the total cost of direct labor:
12,000 jars ÷ 20 jars/batch = 600 batches
600 batches x 60 minutes/batch ÷ 60 minutes/hour = 600 hours
600 hours x $15/hour = $9,000

Step 4: Calculate the total cost of goods manufactured:
Direct materials + Direct labor = Total cost of goods manufactured
$5,760 + $9,000 = $14,760

Step 5: Calculate the cost of goods sold:
Cost of goods manufactured - Ending finished goods inventory = Cost of goods sold
$14,760 - (16,000 x 25% x $15) = $138,600

Therefore, the answer is B) $138,600.

Percy's Pickled Snacks Produces Several Types of Pickled Vegetables