PROBLEM ONE Bertie\'s Botts manufactures and sells plastic bottles to several be
ID: 2486513 • Letter: P
Question
PROBLEM ONE
Bertie's Botts manufactures and sells plastic bottles to several beverage companies. All plastic bottles produced are identical. At year end (on December 31, 2010), the company gathered the following information to prepare for the 2015 budget.
Materials and Labor Requirements:
Direct materials
20 grams of plastic needed per bottle
$0.003/gram
Direct labor
5.8 seconds needed per bottle
$19/hour
Manufacturing overhead
DLH as an allocation base
Predetermined overhead rate = $4.50/DLH
The company expects to sell 18,000,000 bottles in 2015 at an estimated average selling price of $0.30 per bottle. The company uses the weighted average method for inventory flow, and has the following balances in inventory.
Direct Material Inventory (plastic):
2015’s Beginning inventory for plastic 20,000,000 grams
2015’s Targeted ending inventory for plastic 10,000,000 grams
Finished Goods Inventory (bottles):
2015's Beginning inventory for bottles 2,000,000 bottles
2015's Budgeted ending inventory for bottles 3,000,000 bottles
Additional budgeted non-manufacturing expenses for 2015 include:
General and administration costs $950,000
Insurance 18,000
Utilities 7,000
Interest on loans 2,000
What is the manufacturing overhead budget for 2015?
a.
$131,000
b.
$152,000
c.
$171,000
d.
None of the above.
What is the direct materials ending inventory?
$15,000
$18,000
$27,000
None of the above.
What is the finished goods ending inventory?
$30,000
$271,833
$293,583
None of the above.
a.$15,000
b.$18,000
c.$27,000
d.None of the above.
Explanation / Answer
What is the manufacturing overhead budget for 2015
Answer: None of the above
What is the direct materials ending inventory?
Answer: None of the above
What is the finished goods ending inventory?
Answer: c ) $293,583
Budgeted number of bottles to be sold 18000000 Add: budgeted ending inventory 3000000 Total requirement 21000000 Less: beginning inventory 2000000 Budgeted Production 19000000 Direct labour required per bottle (seconds) 5.8 Total direct labour required (seconds)-(a) 110200000 Direct labour hours required (a/ 3600) 30611.11111 Predetermined overhead rate per DLH ($) 4.5 Total Manufacturing overhead budget for 2015 ($) 137750Related Questions
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