Detmer Enterprises has budgeted sales for the next five months as follows: Budgt
ID: 2473853 • Letter: D
Question
Detmer Enterprises has budgeted sales for the next five months as follows:
Budgted Sales in Units January 4,600 units February 7,200 units March 5,400 units April 6,800 units May 3,800 units
Past experience has shown that the ending inventory for each month should be equal to 15% of the next month's expected sales in units. The company is currently preparing a production budget.
Calculate the total number of units budgeted to be produced in April. Enter your answer as a number (i.e., 1,000). Do not use the $, decimals, or type the word units after your answer
Explanation / Answer
Explanation:
February
March
April
May
Sales in units
7,200
5,400
6,800
3,800
+ desired ending inventory
810
1,020
570
(5,400 x 15%)
(6,800 x 15%)
(3,800 x 15%)
Total units
6,420
7,370
- beginning inventory
<810>
<1,020>
(Feb end inv)
(Mar end inv)
Units to be produced
5,610
6,350
February
March
April
May
Units to be produced
5,610
6,350
x DL hours per unit
2
2
x DL rate per hour
10
10
DL Cost
$112,200
$127,000
Cash paid in April for direct labor
80% of April direct labor = ($127,000 x 80%) = $101,600
20% of March direct labor = ($112,200 x 20%) = 22,440
Cash paid for direct labor = $124,040
February
March
April
May
Sales in units
7,200
5,400
6,800
3,800
+ desired ending inventory
810
1,020
570
(5,400 x 15%)
(6,800 x 15%)
(3,800 x 15%)
Total units
6,420
7,370
- beginning inventory
<810>
<1,020>
(Feb end inv)
(Mar end inv)
Units to be produced
5,610
6,350
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