The chief financial officer for Cast In Stone concrete products had previously e

Question

The chief financial officer for Cast In Stone concrete products had previously established a line of credit with a local bank that enables Cast In Stone to borrow 80% of the company's inventory balance. The company currently has 1,000 units in stock, and is performing "on budget." The budget anticipated that direct labor cost would be $15 per hour, and factory overhead is applied to production based on $7.50 per direct labor hour. Each unit requires 2.5 labor hours and 800 pounds of direct material. The direct material costs $0.10 per pound.

Determine the amount of credit available under the borrowing agreement.

Explanation / Answer

direct labor cost 15 2.5 h labor 37.5 factory overhead 7.5 2.5 h labor 18.75 The direct material costs 0.1 800 80 Value Of Stock per unit 136.25 Value of Stock 136.25*1000 136250 Borrowings 80% of value of stock 109000

Related Questions

Navigate

• Browse (All)
• Browse T
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.