To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2020, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Sandhill uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2020, the company expects to declare and pay an $8,870 cash dividend. The company's cash budget shows an expected cash balance of $5,880 at December 31, 2020. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2020, the company expects to purchase additional equipment costing $11,050. $9,047 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Sandhill expects to pay $10,290 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2020, includes amounts due suppliers (see above) plus other accounts payable relating to manufacturing overhead of $8,750. Unpaid income taxes at December 31 will be $6,270. (a) Prepare a budgeted statement of cost of goods sold.
To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2020, the production budget shows 9,000 required units of output. The total unit cost of production is expected to be $18. Sandhill uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be $3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2020, the company expects to declare and pay an $8,870 cash dividend. The company's cash budget shows an expected cash balance of $5,880 at December 31, 2020. All sales and purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid 50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were the same as the materials used. In 2020, the company expects to purchase additional equipment costing $11,050. $9,047 of depreciation expense on equipment is included in the budget data and split equally between manufacturing overhead and selling and administrative expenses. Sandhill expects to pay $10,290 on the outstanding notes payable balance plus all interest due and payable to December 31 (included in interest expense $3,500, above). Accounts payable at December 31, 2020, includes amounts due suppliers (see above) plus other accounts payable relating to manufacturing overhead of $8,750. Unpaid income taxes at December 31 will be $6,270. (a) Prepare a budgeted statement of cost of goods sold.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:To meet sales requirements and to have 2,500 units of finished goods on hand at December 31, 2020, the
production budget shows 9,000 required units of output. The total unit cost of production is expected to be
$18. Sandhill uses the first-in, first-out (FIFO) inventory costing method. Interest expense is expected to be
$3,500 for the year. Income taxes are expected to be 40% of income before income taxes. In 2020, the
company expects to declare and pay an $8,870 cash dividend.
The company's cash budget shows an expected cash balance of $5,880 at December 31, 2020. All sales and
purchases are on account. It is expected that 60% of quarterly sales are collected in cash within the quarter
and the remainder is collected in the following quarter. Direct materials purchased from suppliers are paid
50% in the quarter incurred and the remainder in the following quarter. Purchases in the fourth quarter were
the same as the materials used. In 2020, the company expects to purchase additional equipment costing
$11,050. $9,047 of depreciation expense on equipment is included in the budget data and split equally
between manufacturing overhead and selling and administrative expenses. Sandhill expects to pay $10,290
on the outstanding notes payable balance plus all interest due and payable to December 31 (included in
interest expense $3,500, above). Accounts payable at December 31, 2020, includes amounts due suppliers
(see above) plus other accounts payable relating to manufacturing overhead of $8,750. Unpaid income taxes
at December 31 will be $6,270.
(a)
Prepare a budgeted statement of cost of goods sold.
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