DI Question .7 3 pts Trago Company manufactures a single product and has a JIT p

Question

DI Question .7 3 pts Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales. It estimates that May's ending inventory will consist of 14,000 units. June and July sales are estimated to be 280,000 and 290,000 units, respectively. Trago assigns variable overhead at a rate of $1.80 per unit of production. Fixed overhead equals $400,000 per month. Compute the number of units to be produced and use this amount to compute the total budgeted overhead that would appear on the factory overhead budget for month of June. $922,000. $920,200. $930,100. $878,800o $904,900. Next Previous

Explanation / Answer

Production in june = June sales + Ending inventory (5%of july sales) - Beginning inventory

= 280,000 + (290,000*5%) - 14,000

= 280,500

Total budgeted overhead = Variable overhead + Fixed overhead

= (280,500 * 1.8) + 400,000

= 904,900

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