Meyer Company manufactures a single product. The company is in the process of preparing its 2006 master budget and has the following information available:
a. The January 1, 2006 balance sheet for the company is as follows:
| ASSETS | LIABILITIES & EQUITY | ||
| Cash | $20,000 | Accounts Payable | $84,300 |
| Accounts Receivable | 100,000 | Common Stock | 250,000 |
| Raw Material Inventory | 13,200 | Retained Earnings | 104,900 |
| Finished Goods Inventory | 26,000 | Total | $439,200 |
| Equipment | 460,000 | ||
| Accum Depreciation | (180,000) | ||
| Total | $439,200 |
b. The company expects to produce 55,000 units in January, 2006; 58,000 unitsin February, 2006; and 52,000 units in March, 2006.
c. Raw materials inventory at January 1, 2006 consisted of 16,500 pounds. Eachunit requires 3 pounds of raw materials. This raw material is purchased for $0.80 per pound. The ending inventory of raw materials should be 10% of the next months production needs.
d. Direct labor costs are budgeted at $38,000 for January, 2006 and $18,000 forFebruary, 2006.
e. Manufacturing overhead is budgeted at $45,000 for January, 2006 and $45,000 for February, 2006. These amounts include depreciation of $3,000 per month.
f. Finished goods inventory at February 28, 2006 is expected to be $39,000.
g. Assume there is no beginning or ending work-in-process inventory.
Calculate the budgeted cost of goods sold for the two month period, January – February 2006.
