Question

6) DeGrom Corporation produces and sells Product “Mr. Met”. To guard against stockouts, the company requires that 25% of the next month's sales be on hand at the end of each month. Budgeted sales of Product “Mr. Met” over the next four months are:

	June	July	August	September
Budgeted sales in units	40,000	70,000	50,000	80,000

Budgeted production for August would be:

A) 57,500 units

B) 107,000 units

C) 70,000 units

D) 80,000 units

7) On November 1, Brady Corporation has 200 units of leather footballs on hand. The company plans to sell 1,100 units of the product during November and plans to have 400 units on hand November 30. How many units must be produced during November?

A) 1,400

B) 1,500

C) 1,100

D) 1,300

8) Graff Corporation manufactures and sells women's skirts. Each skirt (unit) requires 2.1 yards of cloth. Selected data from Graff master budget for next quarter are shown below:

	July	August	September
Budgeted sales (in units)	7,000	8,000	10,000
Budgeted production (in units)	8,000	11,500	13,000

Each unit requires 0.8 hours of direct labor, and the average hourly cost of Graff direct labor is $18. What is the cost of Graff Corporation's direct labor in September?

A) $198,000

B) $158,400

C) $187,200

D) $234,000

Answer 1

6.

Budgeted production for August = Budgeted sales of August + Ending finished goods units - Beginning finished goods units

= 50,000 + (80,000 * 0.25) - (50,000 * 0.25).

= 50,000 + 20,000 - 12,500

= 57,500

Ending finished goods units = 25% of Budgeted units sales of next month.

7.

Units must be produced during the November = Units sold + Planned Ending units - Beginning units

= 1,100 + 400 - 200

= 1,300 units

8.

Production of units in September = 13,000.

Direct labor hour is $0.80 per unit

Total direct labor hours needed = 13,000 * $0.80

= 10,400 hours

Total direct labor cost = Total Direct labor hours needed * Direct labor rate

= 10,400 * $18

= $187,200