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7 August, 04:25

A company determined that the budgeted cost of producing a product is $30 per unit. On June 1, there were 80,000 units on hand, the sales department budgeted sales of 300,000 units in June, and the company desires to have 120,000 units on hand on June 30. The budgeted cost of goods sold for June would be a. $7,800,000. b. $11,400,000. c. $9,000,000. d. $10,200,000.

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  1. 7 August, 04:34
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    c) $9,000,000

    Explanation:

    The cost of good sold = Cost per unit * Quantity sold

    Quantity sold = 300,000, cost per unit = $30

    The cost of sold = $30 * 300,000 = $9,000,000

    This can be confirmed as follows:

    Unit

    opening inventory 80,000

    Production (see note below) 340,000

    Available or sale 420,000

    Closing inventory (120,000)

    Units sold 300,000

    Cost of units sold = 300,000 * $30 = $9,000,000

    Note:

    Production budget = sales budget + closing inventory - opening inventory

    = 300,000 + 120,000 - 80,000 = 340,000 units
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