Refer to Cornerstone Exercise 8 6 In Exercise Play Disc makes Frisbee type plastic
Refer to Cornerstone Exercise 8.6.
In Exercise Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following manufacturing costs:
Direct materials ....... $1.67
Direct labor ........ 0.56
Variable overhead ....... 0.72
Fixed overhead ....... 1.80
Total unit cost ....... $4.75
For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000 of them. Budgeted beginning inventory in units is 16,000 with unit cost of $4.75.
1. Calculate the total budgeted cost of units produced for Play-Disc for the coming year. Show the cost of direct materials, direct labor, and overhead.
2. Prepare a cost of goods sold budget for Play-Disc for the year.
3. What if the beginning inventory of finished goods was $75,200 (for 16,000 units)? How would that affect the cost of goods sold budget? (Assume Play-Disc uses the FIFO method.)
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