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# Formula for expected production and costs

Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots next year. The company has enough beginning inventory of direct materials to produce 48,000 units. Beginning inventory of finished units total 4000 with a target ending inventory of 5,000. The company keeps no work in process inventory. The flowerpots sell for \$6.00 each. Direct materials for each flowerpot total \$2.00, while direct labor is \$1.00. Factory overhead is \$0.40 flowerpot.

Based on this information, how many flowerpots are expected to be produced next year

a) 48000
b) 44000
c) 41000
d) 39000
e) none of the above

Total sales for next year are expected to be:

a) 216000
b) 240000
c) 312000
d) 318000
e) none of the above

What will be the total cost incurred next year?

Direct Materials Direct Labor Mfg Overhead
a) 0 \$40,000 \$16,000
b) 0 \$41,000 \$16,000
c) \$80,000 \$40,000 \$16,000
d) \$82,000 \$41,000 \$16,400
e) \$82,000 \$41,000 \$16,000

#### Solution Preview

a. 4000 - 40000 + 5000 = 41000

b. 40000X 6.000 = ...

#### Solution Summary

A breakdown of the formulas for analyzing expected production and total costs.

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