Question

For Goody Company, the budgeted cost for one unit of product is direct materials $10, direct labor $20, and manufacturing overhead 80% of direct labor cost. If 25,000 units are expected to be sold at $65 each, what is the budgeted gross profit?

Answer 1

$475,000

Step-by-step explanation:

Direct materials (M) = $10 per unit

Direct labor (L) = $20 per unit

Manufacturing overhead (O) = 80% of L = 0.8 *$20 =$16 per unit

Selling Price (S) = $65 per unit

Units sold (N) = 25,000 units

The budgeted gross profit for 25,000 units is:

`P = N*(S-(M+L+O))\\P=25,000*(\$65-(\$10+\$20+\$16))\\P=\$475,000`

The budgetd gross profit for Goody Company is $475,000