Reference no: EM132548702

Point 1: The management of Tizio Lamps have asked you to project the cost of goods sold budget as well as several other budgets for the 2020 fiscal year. Because the company just recently began operations, it only produces one style of lamp, which it sells for $125. In 2019, the company sold 150,000 lamps. Due to growing demand for their lamps, the marketing department has estimated that sales will increase by 50% in 2020. Marketing also believes that sales will be distributed through the year as follows: 30% in the first quarter, 20% in the second, 25% in the third, and 25% in the final. In addition, long-term forecasts show that in the first quarter of 2021, sales will be 96,500 lamps.

Point 2: Accounting records show 1,500 units in the finished goods inventory with a value of $37,500 at the end of 2019. Also, the records show 3,000 lamp bases (with a value of $39,000), 2,800 Swivel Arms ($14,500), and 40,000 screws ($1,600) in the direct materials inventories. In 2020 Tizio management wants to keep 30% of the following quarter's sales in its ending finished goods inventory and 25% of the direct materials needed for the following quarter's production. The purchasing department has supplied you with the prices that the company's suppliers will charge in 2020: $13.25 per Lamp base, $7.50 per Swivel arm, and $.05 per screw.

Point 3: According to production requirements, each lamp requires one base and one swivel arm as well as 11 screws. The department estimates that two lamps can be assembled in one hour at a rate of $11.67 per labor hour. To cover indirect labor and other manufacturing costs, management applies overhead costs at a rate of $13.47 per direct labor hour to each lamp.

Question 1: What is cost per unit?