Question 10 Bonkowski Corporation makes one product and has provided the followi

Question

Question 10

Bonkowski Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:

Credit sales are collected:

30% in the month of the sale

70% in the following month

Raw materials purchases are paid:

30% in the month of purchase

70% in the following month

The ending finished goods inventory should equal 30% of the following month's sales. The ending raw materials inventory should equal 10% of the following month’s raw materials production needs.

The estimated direct labor cost for February is closest to:

$284,970

$712,425

$499,000

$30,975

Budgeted selling price per unit $ 97 Budgeted unit sales (all on credit): January 10,000 February 12,000 March 13,300 April 15,200

Explanation / Answer

Calculation of no. of units produced in February.

Opening Inventory = 12000* 30% = 3600

Budgeted Sales for February= 12000

Closing Inventory = 13300* 30% = 3990

No of units produced = 12000+3990-3600 = 12390 units

Direct Labor rate = $23 per hour

Labor Cost = 12390 * $23 = $284,970

The estimated direct labor cost for February is closest to $284,970.

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