The Devon Motor Company produces motorcycles. During April, the company purchased 8,000 batteries at a cost of $10 per battery. Devon withdrew 7,600 batteries from the storeroom during the month. Ofthese, 100 were used to replace batteries in motorcycles used by the company’s traveling sales staff. Theremaining 7,500 batteries withdrawn from the storeroom were placed in motorcycles being produced bythe company. Of the motorcycles in production during April, 90% were completed and transferred fromwork in process to finished goods. Of the motorcycles completed during the month, 30% were unsold atApril 30.There were no inventories of any type on April 1.Required:1. Determine the cost of batteries that would appear in each of the following accounts at April 30:a. Raw Materials.b. Work in Process.c. Finished Goods.d. Cost of Goods Sold.e. Selling Expense.2. Specify whether each of the above accounts would appear on the balance sheet or on the incomestatement at April 30.
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
The Devon Motor Company produces motorcycles. During April, the company purchased 8,000 batteries at a cost of $10 per battery. Devon withdrew 7,600 batteries from the storeroom during the month. Of
these, 100 were used to replace batteries in motorcycles used by the company’s traveling sales staff. The
remaining 7,500 batteries withdrawn from the storeroom were placed in motorcycles being produced by
the company. Of the motorcycles in production during April, 90% were completed and transferred from
work in process to finished goods. Of the motorcycles completed during the month, 30% were unsold at
April 30.
There were no inventories of any type on April 1.
Required:
1. Determine the cost of batteries that would appear in each of the following accounts at April 30:
a. Raw Materials.
b. Work in Process.
c. Finished Goods.
d. Cost of Goods Sold.
e. Selling Expense.
2. Specify whether each of the above accounts would appear on the
statement at April 30.
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