1. Lea Company produces hand tools. Budgeted sales for March are 10,700 units. B
ID: 2579358 • Letter: 1
Question
1. Lea Company produces hand tools. Budgeted sales for March are 10,700 units. Beginning finished goods inventory in March is budgeted to be 2,300 units, and ending finished goods inventory is budgeted to be 2,000 units. How many units will be produced in March?
A 10,700
B 11,000
C 10,400
D 15,000
2. Peach has received a special order for 10,000 units of its product. The product normally sells for $29 and has the following manufacturing costs:
Assume that Peach has sufficient capacity to fill the order. What price should Peach charge to make a $10,000 incremental profit?
A $25
B $15
C $22
D $29
3. Manufacturing overhead was estimated to be $365,400 for the year along with 20,300 direct labor hours. Actual manufacturing overhead was $380,000, and actual labor hours were 21,700. To dispose of the balance in the Manufacturing Overhead account, which of the following would be correct?
A Manufacturing Overhead would be debited for $14,600
B Manufacturing Overhead would be debited for $10,600
C Manufacturing Overhead would be credited for $14,600
D Manufacturing Overhead would be credited for $10,600
4. Pinto Co. has received a special order for 2,900 units of its product at a special price of $190. The product normally sells for $230 and has the following manufacturing costs:
Assume that Pinto Co. has sufficient capacity to fill the order without harming normal production and sales. If Pinto Co. accepts the order, what effect will the order have on the company’s short-term profit?
A $95,700 increase
B$104,400 increase
C $116,000 decrease
D$104,400 decrease
5. Jillian Inc. produces leather handbags. The production budget for the next four months is: July 5,200 units, August 7,600, September 7,500, October 8,300. Each handbag requires 1.9 hours of unskilled labor (paid $15 per hour) and 3.2 hours of skilled labor (paid $23 per hour). What will be the total labor cost for the month of August?
A $174,800
B $126,360
C $559,360
D $775,960
Per unit Direct materials $ 6 Direct labor 5 Variable manufacturing overhead 3 Fixed manufacturing overhead 11 Unit cost $ 25Explanation / Answer
1)
Production = sales + closing stock - opening stock
= 10,700 + 2,000 - 2,300
= 10,400 units (C)
2) While evaluating special orders, fixed overhead costs are not to be considered
cost of production = 25
(-) fixed overheads = 11
Unit cost = 14
In order to achieve incremental profit of $ 10,000 for sale of 10,000 units each unit should contribute 1$
Therefore price to be charged for achieving incremental profit of $10,000 = 14 + 1 = 15 per unit (B)
3)
Estimated manufacturing OH per direct labour hour = 365,400 / 20300 = 18 per DLH
Estimated Manufacturing OH for 21700 hours = 21,700 * 18 = 390,600
Actual Manufacturing OH = 380,000
Difference = 10,600 favourable (390,600 - 380,000)
Therefore to dispose the balance in manufacturing OH A/C, Manufacturing OH A/C is to be debited with 10,600 (B)
4) While evaluating special orders, fixed overhead costs are not to be considered
Therefore unit cost = 62 + 53 + 42 = 157
Special order price = 190
Profit = 190 - 157 = 33
If the special order is accepted , Profit of pinto will increase by 2900 * 33 = $ 95,700 (A)
5)
Total labor cost for month of august -= 559,360 + 216,600 = 775,960(D)
Skilled = 7,600 * 3.20 * 23 =559,360
Unskilled = 7,600 * 1.90 * 15 = 216,600
Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.