Assume you have developed and tested a new electronic product for your new business. You purchase pre-programmed computer chips at $80 per unit. Other component costs include: plastic casings at $25 per unit and assembly hardware at $8 per unit. Direct labor costs are $16 per hour and three units can be produced per hour. You intend to sell each unit at a 60 percent mark-up over the total costs of producing each unit. The plan is to produce 600 product units per month in January, February, and March. Sales are expected to be: 280 units in January, 620 units in February, and 800 units in March.
A. Calculate the dollar amount of sales revenue expected in each month (i.e., January, February, and March) and for the first quarter of the year.
B. Prepare a cost of goods sold schedule for each of the three months and for the first quarter of the year. Using your cost of goods sold estimates and the sales revenues expected in Part A, calculate the gross earnings for January, February, and March, as well as for the first quarter of the year.