Answer:
Results are below.
Explanation:
Giving the following information:
Direct material:
Each purse requires 3 pounds of direct materials for $4 per pound.
The company’s policy is to end each month with direct materials inventory equal to 40% of the next month’s materials requirement.
At the end of August the company had 3,480 pounds of direct materials in inventory.
Direct labor:
0.7 direct labor hours at a rate of $17 per hour.
Overhead:
Variable manufacturing overhead is charged at a rate of $3 per direct labor hour.
Fixed manufacturing overhead is $13,000 per month. T
Production Budget:
September= 5,300 units
October= 6,900 units
November= 6,300 units
1) Direct material budget:
September (in pounds):
Production= 5,300*3= 15,900
Desired ending inventory= (6,900*3)*0.4= 8,280
Beginning inventory= (3,480)
Total pounds= 20,700
Total cost= 20,700*4= $82,800
October (in pounds):
Production= 6,900*3= 20,700
Desired ending inventory= (6,300*3)*0.4= 7,560
Beginning inventory= (8,280)
Total pounds= 19,980
Total cost= 19,980*4= $79,920
2) Direct labor:
September:
Total direct labor hours= 0.7*5,300= 3,710
Total cost= 3,710*17= $63,070
October:
Total direct labor hours= 0.7*6,900= 4,830
Total cost= 4,830*17= $82,110
3) Manufacturing overhead:
September:
Variable overhead= $3*3,710= $11,130
Fixed overhead= 13,000
Total overhead= $24,130
October:
Variable overhead= $3*4,830= $14,490
Fixed overhead= 13,000
Total overhead= $27,490
