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# Assuming the amount budgeted to be produced in January is 30

1. Fantastic Futons go through two departments in the production process. Each futon requires two direct labor hours in Department A and one hour in Department B. the labor cost is \$8 per hour in Department A, and \$10 per hour in Department B.

Assuming the amount budgeted to be produced in January is 30,000 units, what is the budgeted direct labor cost for January?

\$840,000
\$810,000
\$540,000
\$780,000

2. Continuing with Fantastic Futons:

Fantastic Futons go through two departments in the production process. Each futon requires two direct labor hours in Department A and one hour in Department B. Labor cost is \$8 per hour in Department A and \$10 per hour in Department B.

The labor capacity for a normal eight-hour shift for a month is 50,000 direct labor hours each for both Departments A and B. Overtime is paid at time and a half. What would be the budgeted direct labor costs for January, assuming a budgeted production of 30,000 units?

\$420,000
\$780,000
\$820,000
\$900,000

3. Continuing with Fantastic Futons:

Fantastic Futons go through two departments in the production process. Each futon requires two direct labor hours in Department A and one hour in Department B. Labor cost is \$8 per hour in Department A and \$10 per hour in Department B.

The budgeted manufacturing overhead rate is \$5 per direct labor hour. What is the budgeted manufacturing overhead cost for January given a budget production of 30,000 units?

\$450,000
\$150,000
\$300,000
\$330,000

4. Leaverton's forecast of sales is as follows: July, \$60,000; August, \$90,000; September, \$130,000. Sales are normally 80% cash and 20% credit in any month. Credit sales are collected in full in the following month. Merchandise cost averages 60% of the sales price. The company desires an inventory as of September 30 of \$52,000. The inventory as of June 30 was \$25,000.

Total purchases that must be made in order to meet the sales and inventory requirement for the quarter amount to:

\$141,000
\$195,000
\$307,000
\$253,000

#### Solution Summary

For each problem, the schedule is created in excel (so you can see formulas in cells) and discussion to guide you.

\$2.19