1. Coleman, Inc. anticipates sales of 51,000 units, 49,000 units, and 52,000 uni
ID: 2466508 • Letter: 1
Question
1. Coleman, Inc. anticipates sales of 51,000 units, 49,000 units, and 52,000 units in July, August, and September, respectively. Company policy is to maintain an ending finished-goods inventory equal to 30% of the following month's sales. On the basis of this information, how many units would the company plan to produce in July?
49,600.
Some other amount.
50,400.
49,000.
51,600.
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2. The following data relate to product no. 33 of La Quinta Corporation:
Direct labor standard: 6 hours at $14 per hour
Direct labor used in production: 55,000 hours at a cost of $781,000
Manufacturing activity: 9,000 units completed
2.The irect-labor rate variance is:
$10,800F.
$10,800U.
$11,000F.
None of these.
$11,000U.
3.The direct-labor efficiency variance is:
$14,000F.
None of these.
$14,200F.
$14,200U.
$14,000U.
Explanation / Answer
1.
Production Budget
Particulars
Jul
Aug
Sep
Dec
Sales
51,000
49,000
52,000
205,000
Less : Beginning Inventory
(15,300)
(14,700)
(15,600)
(61,500)
Add: Ending Inventory
14,700
15,600
61,500
14,700
Total
50,400
49,900
97,900
158,200
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2.
DL Rate Variance = ( SR AR ) × AH
=SR x AH- ARAH
Where,
SR is the standard direct labor rate=$14
AR is the actual direct labor rate
AH are the actual direct labor hours=55,000
ARAH=$781,000
=14 x 55,000-$781,000
=$770,000-$781,000
=$11,000 U
3.
DL Efficiency Variance = ( SH AH ) × SR
Where,
SH are the standard direct labor hours allowed=6 x 9,000=54,000
AH are the actual direct labor hours used=55,000
SR is the standard direct labor rate per hour=$14
=(54,000-55,000) x 14
=$14,000 U
Production Budget
Particulars
Jul
Aug
Sep
Dec
Sales
51,000
49,000
52,000
205,000
Less : Beginning Inventory
(15,300)
(14,700)
(15,600)
(61,500)
Add: Ending Inventory
14,700
15,600
61,500
14,700
Total
50,400
49,900
97,900
158,200
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