January February March April May Estimated unit sales 11,000 11,900 8,100 8,300

Question

January February March April May Estimated unit sales 11,000 11,900 8,100 8,300 9,000 Sales price per unit $50.2 $48.5 $48.5 $48.5 $48.5 Direct labor hours per unit 2.5 2.5 1.6 1.6 1.6 Wage per direct labor hour $7 $7 $7 $8 $8 Donnegal has a labor contract that calls for a wage increase to $8 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1. Donnegal expects to begin the year with 15,760 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 40% of the second following month’s sales.

Explanation / Answer

January februrary march april may total Sales 11000 11900 8100 8300 9000 48300 Sales price per unit 50.2 48.5 48.5 48.5 48.5 Revenue 552200 577150 392850 402550 436500 2361250 Labour cost of goods sold 192500 208250 90720 106240 115200 712910 Direct labour hrs per unit 2.5 2.5 1.6 1.6 1.6 Wages per hour 7 7 7 8 8 rate per unit 17.5 17.5 11.2 12.8 12.8 Ending Inventory is 100% of following month and 40% of next following month Begnning inventory In hand Sales Ending inventory january 15760 11000 15140 Februrary 15140 11900 11420 March 11420 8100 11900 April 11900 8300 May 9000

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