You have obtained the following sales data for the past nine months, as well as three months
Question:
You have obtained the following sales data for the past nine months, as well as three months of forecasted data:
Month Units sold
January 74 February 90 March 210 April 240 May 255 June 205 July 180 August 160 September 90 October (forecast) 85 November (forecast) 70 December (forecast) 65
Power-Ride had a one-time special order in April for 15 Ride-Outs that is not expected to occur this upcoming year. One of Power-Ride's retailers, Outfitters Inc., recently closed. It accounted for 5% of regular sales for January to March, and 8% of regular sales for the remainder of the year. The Ride-Outs currently sell for $1,400 per unit, and the company is planning to increase the selling price by 5% for the coming year. Market research shows that two-wheeled personal transportation vehicles are gaining popularity with those who live in hilly or windy areas and those with reduced fitness levels. As a result, experts are predicting that sales growth in this market will be at least 6% in the coming year. Power-Ride requires inventories of finished goods on hand at the end of each month to be equal to 50% of the following month's budgeted sales. Power-Ride expects to have 20 units on hand on this December 31 (at year end).
You have completed the budgets for the production inputs for next year, summarized below.
January February March April May June
Direct materials $30,624 $50,945 $75,547 $76,000 $63,230 $50,584
Direct labour $30,019 $49,940 $74,055 $74,499 $61,981 $49,585
Manufacturing overhead $12,615 $20,986 $31,120 $31,307 $26,046 $20,837
July August September October November December
Direct materials $41,678 $32,772 $29,923 $27,608 $23,867 $22,528
Direct labour $40,855 $32,126 $29,332 $27,062 $23,395 $22,083
Manufacturing overhead $17,169 $13,500 $12,326 $11,372 $ 9,832 $ 9,280
The cost per unit of the opening inventory in January is expected to be $705 per unit.
Monthly inventory is costed at the average annual manufacturing costs for the year based on the required production level, and any over- or under amounts are included in the cost of goods sold for the month.
could you please advise on how the cost of goods sold budget should be calculated for all months (Jan-Dec)?
Advanced Financial Accounting
ISBN: 978-0137030385
6th edition
Authors: Thomas Beechy, Umashanker Trivedi, Kenneth MacAulay