Pacific has forecast sales for the next three months as follows: July 4,000 unit
ID: 2549576 • Letter: P
Question
Pacific has forecast sales for the next three months as follows: July 4,000 units, August 6,000 units, September 7,500 units. Pacific's policy is to have an ending inventory of 40% of the next month's sales needs on hand. July 1 inventory is projected to be 1,500 units. Monthly costs are budgeted as follows:
What is budgeted manufacturing overhead cost for August?
$33,000
$47,000
$50,000
$32,000
Fixed manufacturing costs $ 17,000 Fixed selling costs $ 10,000 Fixed administrative costs $ 8,300 Variable manufacturing costs $ 5 per unit produced Variable selling costs $ 3 per unit soldWhat is budgeted manufacturing overhead cost for August?
$33,000
$47,000
$50,000
$32,000
Explanation / Answer
JULY AUG SEPT sales (Units) 4000 6000 7500 Opening Inventory (Units) 1500 2400 3000 Closing inventory (Units) 2400 3000 Units Produced (Sales + Closing Inv - Opening Inv) 4900 6600 4500 Fixed Manufacturing Costs $ 17,000 Variable manufacturing Costs (5 * 6600) $ 33,000 Budgeted manufacturing cost for August $ 50,000
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