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.
Required:
1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year.
2. What if sales increased to 290,000 discs? How would that affect the ending finished goods inventory budget? Calculate the value of budgeted ending finished goods inventory.