1. Northcutt\'s production data for a new deluxe product were taken from the mos

Question

1. Northcutt's production data for a new deluxe product were taken from the most recent quarterly production budget:

In addition, Northcutt produces 5,200 units a month of its standard product. It takes 2 direct labor hours to produce each standard unit and 2.25 direct labor hours to produce each deluxe unit. Northwest's cost per labor hour is $17. Direct labor cost for August would be budgeted at:

Some other amount.

$236,300.

$218,875.

$222,700.

$239,700.

2. Quattro began operations in April of this year. It makes all sales on account, subject to the following collection pattern: 25% are collected in the month of sale; 55% are collected in the first month after sale; and 20% are collected in the second month after sale. If sales for April, May, and June were $70,000, $90,000, and $80,000, respectively, what were the firm's budgeted collections for April?

$20,000.

$61,000.

$52,500.

$17,500.

Some other amount.

Explanation / Answer

Planned production in August

Standard = 5200 units

Direct labor hrs= 2 hrs per unit

Total LAbor hrs on Standard product = 5200 x 2, =10400

Deluxe product = 1200 units

Direct Labor Hr = 2.25 ,

Total labor hrs on Deluxe products, =1200 x 2.25,= 2700

Totla budgeted hrs for August = 10400 +2700, =13100

Budgeted expense = 13100 x 17 ( Rate per hr), = 222700 ( option c)

2) Firm sale for month of april = 70000

Budgeted collection = 25 % of sale, = 17500

Option D is answer

Reason - this is first month and only current month sale collection will be received

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