Question

# Presented is selected first quarter budget data for the Barney Company: Sales January 25,000 units February...

Presented is selected first quarter budget data for the Barney Company:

 Sales January 25,000 units February 20,000 units March 42,000 units

Each unit of finished product requires two pounds of raw materials.

Barney maintains ending finished goods inventories equal to 25 percent of the following month's budgeted sales.

Barney maintains raw materials inventories equal to 20 percent of the following month's budgeted production.

January 1 inventories are in line with Barney's inventory policy.

Presented is additional information for the Barney Company

• Price per pound of raw materials \$25
• Direct labor per unit of finished product 0.50 hours at \$20 per hour
• Total monthly factory overhead \$150,000 + \$10 per direct labor hour

Barney's total manufacturing cost budget for January is:

Select one:

A. \$1,575,000

B. \$1,717,500

C. \$1,693,750

D. \$1,425,000

 Calculation of total manufacturing cost budget for jan particulars jan feb inventory at beginning 25%(25000), 25%*20000 6250 5000 producton unit (b.f) 23750 25500 sales 25000 20000 inventory at the end 5000 10500 direct material = 23750*2*25 =1187500 Direct labour = 23750*0.5*20= 237500 overhead cost = 0.5*10*23750=118750 fixed factory overhead = 150000 total manufacturing cost = 1187500+237500+118750+150000= 1693750 therefore option "C" is correct

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