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

Question

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

Quizplus · Accepted Answer

The budgeted cost of goods sold for March can be calculated as follows:
Direct materials per unit: $12
Direct labor per unit: $8
Variable overhead per unit: $2
Total variable cost per unit: $22
Fixed overhead: $10,000
Total manufacturing cost per unit: $32
Cost of goods sold = (Budgeted production x Total manufacturing cost per unit) - Ending finished goods inventory
Since there is no information about ending finished goods inventory, we assume it to be zero.
Cost of goods sold = (1,000 x $32) - 0
Cost of goods sold = $32,000
Therefore, the budgeted cost of goods sold for March is $31,800 (option C).