The following information applies to questions 13 thru 17 on the exam. You may w

Question

The following information applies to questions 13 thru 17 on the exam. You may want to copy this information to another document for future reference.

Kyoto, Inc. predicts the following sales in units for the coming four months:
sales in units April 240 May 280 June 300 July 240

Although each month's ending inventory of finished units should be 60% of the next month's sales, the March 31 finished goods inventory is only 100 units. A finished unit requires five pounds of raw material B. The March 31 raw materials inventory has 200 pounds of B. Each month's ending inventory of raw materials should be 30% of the following month's production needs.

Kyoto's budgeted production for the second quarter is:

If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour, what is the budgeted labor cost for May?

If each unit of Kyoto's product takes two hours to produce and the labor rate is expected to be $10 per hour, what is the budgeted labor cost for the second quarter?

Explanation / Answer

HI,

Hi,

Please find the answer as follows:

Direct Labor Cost for May = 292*2*10 = 5840

Direct Labor Cost for the Quarter = 864*2*10 = 17280

Budgeted Production for April = 240 + .60*280 - 100 = 308

Budgeted Production for May = 280 + 300*.6 - 280*.6 = 292

Budgeted Production for June = 300 + 240*.6 - 300*.6 = 264

Total Budgeted Production = 308 + 292 + 264 = 864

Thanks.

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