Item$9$

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Item $9$

PA$8-5($Algo$)$ Preparing Operating Budget Components $[$LO $8-3$f$,$ g$,$ h$]$

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $$60.$ Wesley expects the following unit sales:

January$2,300$February$2,600$March$2,900$April$3,000$May$2,200$

Wesley$$s ending finished goods inventory policy is $30$ percent of the next month$$s sales.

Suppose each handisaw takes approximately $0\mathrm{.}35$ hour to manufacture, and Wesley pays an average labor wage of $$15\mathrm{.}50$ per hour.

Each handisaw requires two plastic components that Wesley purchases from a supplier at a cost of $$3\mathrm{.}00$ each. The company has an ending direct materials inventory policy of $10$ percent of the following month$$s production requirements. Materials other than the plastic components total $$4\mathrm{.}50$ per handisaw.

Manufacturing overhead for this product includes $$60,000$ annual fixed overhead $($based on production of $24,000$ units$)$ and $$0\mathrm{.}90$ per unit variable manufacturing overhead. Wesley$$s selling expenses are $6$ percent of sales dollars, and administrative expenses are fixed at $$15,000$ per month.

Required:

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Compute the budgeted cost of goods sold for the first quarter.