Question

Company determined that the expected unit production cost is $40. On June 1st, there was 87000 units on hand. Sales department budgeted sales of 360000 units in June and the company desires to have 120000 units on hand on June 30th. The budget cost of goods produced for June is?

Answer 1

The budget cost of goods produced for June is $15,720,000.

Step-by-step explanation:

To determine the budget cost of goods produced for June, we need to consider the change in the number of units on hand. The formula to calculate the budgeted cost of goods produced is:

Budgeted Cost of Goods Produced = Cost per Unit × (Desired Ending Inventory - Beginning Inventory) + Desired Sales

Using the given information:

Cost per Unit: $40

Beginning Inventory: 87,000 units

Desired Ending Inventory: 120,000 units

Desired Sales: 360,000 units

Substituting the values into the formula:

Budgeted Cost of Goods Produced = $40 × (120,000 - 87,000) + 360,000 × $40

Simplifying the equation:

Budgeted Cost of Goods Produced = $40 × 33,000 + $14,400,000

Budgeted Cost of Goods Produced = $1,320,000 + $14,400,000

Budgeted Cost of Goods Produced = $15,720,000