Petrini Corporation makes one product and it provided the following information

Question

Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations a The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,800, 12,000, and 11,700 units, respectively. All sales are on credit. b. Regarding credit sales, 30% are colected in the month of the sale and 70% in the folong month. C. The ending finished goods inventory equals 30% of the following month's sales. d. The ending raw materials in entory eq als 10% of the following month's raw materia s production needs. Each unit o, fins ed goos requires 5 ounds or raw matenus. The ate a s st $4.00 per pound e Regarding raw materials purchases 40% are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours g. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour h. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000 The estimated finished goods inventory balance at the end of February is closest to: $74,880 $362,160 $316,080 $287.280

Explanation / Answer

ending finished goods inventory = ending finished goods required in units * per unit cost of manufacturing

ending finished goods required in units = next month's sales *30%

= 12000 units *30%

= 3600 units

cost of manufacturing :

direct material = 5 pound *$ 4 = $ 20

direct labour = 2.6 dlh * $23 = $ 59.8

manufacturing overhead = 2.6 dlh * $8 = $ 20.8

total = $ 100.6

ending finished goods inventory = 3600 units * $100.6 per unit

= $ 362160

so , option (b) is correct.

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