Crystal,Inc.has prepared the following budgets for March.In March,budgeted production is 1,000 units,budgeted sales is 1,200 units,and raw materials inventory will stay constant.What is budgeted cost of goods sold for March?

Question

Quizplus · Accepted Answer

To calculate the budgeted cost of goods sold, we need to use the following formula:
Budgeted Cost of Goods Sold = (Beginning Finished Goods Inventory + Cost of Goods Manufactured) - Ending Finished Goods Inventory
Since the question does not provide information about the inventory levels, we can assume that the beginning and ending finished goods inventory levels are the same. Therefore, we only need to calculate the cost of goods manufactured. Using the information in the table, we can calculate the cost of goods manufactured as follows:
Direct materials = $7,000
Direct labor = $4,000
Factory overhead = $3,000
Total manufacturing cost = $14,000
Add beginning work in process inventory = $2,400
Subtract ending work in process inventory = $1,200
Cost of goods manufactured = $15,200
Therefore, the budgeted cost of goods sold would be:
Budgeted Cost of Goods Sold = (Beginning Finished Goods Inventory + Cost of Goods Manufactured) - Ending Finished Goods Inventory
Budgeted Cost of Goods Sold = ($0 + $15,200) - $0
Budgeted Cost of Goods Sold = $15,200
However, we need to convert the cost of goods manufactured from a product basis to a unit basis since the question provides information in terms of units sold. Using the information in the table, we can calculate the cost per unit as follows:
Total manufacturing cost = $14,000
Divide by total units produced = 1,000 units
Cost per unit = $14
Therefore, the budgeted cost of goods sold for 1,200 units sold would be:
Budgeted Cost of Goods Sold = 1,200 units x $14 per unit
Budgeted Cost of Goods Sold = $16,800
However, we also need to subtract any decrease in finished goods inventory. Since the question does not provide information about the ending finished goods inventory, we can assume that it remains constant. Therefore, the budgeted cost of goods sold for March would be:
Budgeted Cost of Goods Sold = $16,800 - $1,360 (calculated as 120 units x $14 per unit)
Budgeted Cost of Goods Sold = $15,440
Therefore, the best choice is C.