Question

Answer the following questions using the information below:

Meridian Industries manufactures and sells two models of watches Prime and Luxuria. It expects to sell 3,000 units of Prime and 1,000 units of Luxuria in 2016.The following estimates are given for 2016:

Prime Luxuria
Selling price $200 $500
Direct materials 20 50
Direct labor 40 150
Manufacturing overhead 40 100

Meridian had an inventory of 200 units of Prime and 75 units of Luxuria at the end of 2015. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 200 units of Luxuria.

Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $10. There were 100 units of Crimpson in stock at the end of 2015.The management does not want to have any stock of Crimpson at the end of 2016.

*41) What is the total budgeted cost of sold for Meridian Industries in 2016?*
A) $500,000
B) $600,000
C) $700,000
D) $800,000

Answer 1

The total budgeted cost of sold for Meridian Industries in 2016 is $1,700,000.

Step-by-step explanation:

To find the total budgeted cost of sold for Meridian Industries in 2016, we need to calculate the total cost of producing and selling the Prime and Luxuria watches. Firstly, we calculate the total cost of Prime watches by multiplying the quantity sold (3,000 units) by the cost per unit, which is the sum of direct materials, direct labor, and manufacturing overhead per unit. This comes out to be $200 (selling price) + $20 (direct materials) + $40 (direct labor) + $40 (manufacturing overhead) = $300 per unit. Therefore, the total cost of producing and selling Prime watches is 3,000 units x $300 per unit = $900,000. Similarly, the total cost of producing and selling Luxuria watches is 1,000 units x ($500 + $50 + $150 + $100) = $800,000. Adding these two costs together, the total budgeted cost of sold for Meridian Industries in 2016 is $900,000 + $800,000 = $1,700,000.