Presented is slected first quarter budget data for the barney company sales janu
ID: 2496031 • Letter: P
Question
Presented is slected first quarter budget data for the barney company
sales january 25000 units
Feb. 20000 units
march 42000 units
Aditional information
- each unit of finsihed product requires two pounds of raw materials.
- barney maintains ending finished goods inventories equal to 25 percent of the following months budgeted sales
- barney maintains raw materials inventories equal to 20 percent of the following months budgeted production
- january 1 inventories are in line with barney's inventory policy
presented is additional information for the barney company
- price per pound raw materials $25
- direct labor per unit of finished product 0.5 hours at $20 per hour
- total monthly factory overhead $150000 +$10 per direct labor hour
Barneys total manufactoring cost budget for january is?
i know the answer i just dont understand where the calculation came from.. can someone expand the calculations for me?
direct materials (47500 x 25)= 1187500
direct labor 23750 x 50 x20= 237500
variable factory overhead 23.75 X .50 X 10 = 118750
fixed factory overhead 150000
= 1693750 answer
Explanation / Answer
You need to find the production in units for the month of January first. For that you need to make a production budget:
Sales + ending inventory - beginning inventory is the production during the period.
Total manufacturing costs for January;
Direct material : 23,750 x 2 x 25 = $1,187,500
Direct labor ; 23,750 x 0.5 x 10 = $ 237,500
Total monthly overhead cost = 150,000 + 23,750 x 0.5 x 10 = $ 268,750
Therefore total manufacturing cost for January is $ 1,693,750
January February Beginning inventory( 25% of month sales) in units 6,250 5,000 Production in units( balancing figure) 23,750 25,500 Sales in units 25,000 20,000 Ending inventory in units 5,000 10,500Related Questions
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