Question

A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 84000 units on hand, the sales department budgeted sales of 350000 units in June, and the company desires to have 130000 units on hand on June 30. The budgeted cost of goods sold for June would be

Answer 1

The budgeted cost of goods sold in June is $ 10,500,000

Explanation:

In order to determine the budgeted cost of goods sold,we need to first and foremost establish goods sold in quantity terms as follows:

goods sold=opening stock+goods produced-closing stock

goods produced=sales-opening stock+closing stock

goods produced=350,000-84,000+130,000=396,000

goods sold=84,000+396,000 -130,000=350000

The cost of producing one unit is $30

costs of goods sold=goods sold*production cost per unit=$30*350000 =

$ 10,500,000.00

Alternatively:

sales units *unit cost of production=$30*350,000=$ 10,500,000.00