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

To calculate the budget cost of goods produced for June, add the budgeted sales to the desired ending inventory, subtract the beginning inventory, and then multiply the result by the expected unit production cost. The budget cost of goods produced for June would be $15,720,000.

Step-by-step explanation:

The question is related to a budgeting exercise for a company, specifically calculating the budget cost of goods produced for the month of June. First, we determine the total number of units needed by adding the desired ending inventory to the sales units and then subtracting the beginning inventory. Next, the total is multiplied by the expected unit production cost to get the budget cost of goods produced.

Here's how you calculate it:

• Total required units = Budgeted sales + Desired ending inventory - Beginning inventory
• Total required units = 360,000 units + 120,000 units - 87,000 units
• Total required units = 393,000 units
• Budget cost of goods produced = Total required units * Expected unit production cost
• Budget cost of goods produced = 393,000 units * $40/unit
• Budget cost of goods produced = $15,720,000

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