Multiple Choice Question 107 A company determined that the b

Multiple Choice Question 107 A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 89000 units on hand, the sales department budgeted sales of 280000 units in June, and the company desires to have 116000 units on hand on June 30. The budgeted cost of goods sold for June would be

$8400000.

$9210000.

$11070000.

$7590000.

Solution

Cost of goods sold = Opening inventory + production – Closing inventory

Units

Amount ($) = Units * Cost per unit $30

Opening Inventory

89000

2670000 [89000*30]

Add: Production

307000 (refer workings)

9210000 [307000*30]

Closing inventory

116000

3480000 [116000*30]

Cost of Goods Sold

8400000

Workings:

Production units = Sales + Closing – Opening = 280000+116000-89000 = 307000 units