A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 40,000 units on hand, the sales department budgeted sales of 150,000 units in June, and the company desires to have 60,000 units on hand on June 30. The budgeted cost of goods manufactured for June would be
A) $3,900,000.
B) $5,700,000.
C) $4,500,000.
D) $5,100,000.

Question

Quizplus · Accepted Answer

The company needs to produce enough units to cover the sales and the desired ending inventory, minus the beginning inventory. This is (150,000 + 60,000 - 40,000) = 170,000 units. At $30 per unit, the cost is 170,000 * $30 = $5,100,000.

A Company Determined That the Budgeted Cost of Producing a Product