Denver Corporation Has the Following Sales Forecast for the Next

question 55

Multiple Choice

Denver Corporation has the following sales forecast for the next quarter: July, 4,000 units; August, 4,800 units; September, 5,600 units
Sales totaled 3,200 units in June.The June ending finished goods inventory was 800 units.End-of-month finished goods inventory levels are planned to be equal to 30 percent of the next month's planned sales.Records showed that each unit is budgeted at 2 pounds of materials costing $3 per pound.Direct labor was budgeted at .5 direct labor hours per unit at a wage of $20 per hour.Budgeted variable overhead is $1.50 per direct labor hour.Fixed overhead is budgeted at $250,000 for the year, and 50,000 units are expected to be produced.
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The beginning finished inventory is valued at $31,320.
After preparing a finished goods inventory budget for August, what is the cost of goods sold for August?

• A) $104,400
• B) $109,620
• C) $67,860
• D) $140,940

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Definitions:

Soybeans

A type of legume native to East Asia, widely grown for its edible beans which are used in various food products and for oil.

Opportunity Cost

Opportunity cost is the cost of foregoing the next best alternative when making a decision, representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Truck

A motor vehicle designed to transport cargo or goods.

Comparative Advantage

The ability of an entity to produce a good or service at a lower opportunity cost than its competitors, leading to more efficient trade.