Question

Suppose Steel City manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 32. Steel City projects sales of 600 ​10-inch skillets per month. The production costs are $ 12 per skillet for direct​ materials, $ 2 per skillet for direct​ labor, and $ 5 per skillet for manufacturing overhead. Steel City has 60 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40​% of the next​ month's sales. Selling and administrative expenses for this product line are $ 1 comma 600 per month. Steel City is budgeted to produce 780 skillets in July with a $ 19 production cost per skillet. Compute the budgeted cost of goods sold for July.

Answer 1

Cost of good sold 600 x 19 = 11,400

Step-by-step explanation:

Direct Materials 12

Direct Labor 2

Overhead 5

Production cost 19

Projected sales 600

Cost of good sold 600 x 19 = 11,400

We are asked for the cost of good sold, which is production cost per unit times units sold.

No additional calculation is needed.