Question

1) Suppose Cook Pro manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $36. Cook Pro projects sales of 575 10-inch skillets per month. The production costs are $13 per skillet for direct​ materials, $2 per skillet for direct​ labor, and $4 per skillet for manufacturing overhead. Cook ProCook Pro has 40 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20​% of the next​ month's sales. Selling and administrative expenses for this product line are $2,000 per month. How many​ 10-inch skillets should Cook ProCook Pro produce in​ July?

A) 575 skillets

B) 650 skillets

C) 730 skillets

D) 690 skillets

2) Suppose Chef Plus manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $30. Chef Plus projects sales of 675 10-inch skillets per month. The production costs are $13 per skillet for direct​ materials, $4 per skillet for direct​ labor, and $6 per skillet for manufacturing overhead. Chef Plus has 35 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40​% of the next​ month's sales. Selling and administrative expenses for this product line are $1,600 per month. Chef Plus is budgeted to produce 910 skillets in July. Compute the total amount budgeted for product costs for July.

A) $16,660

B) $20,930

C) $21,735

D) $15,525

3) Suppose Iron Handles manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $34. Iron Handles projects sales of 625 ​10-inch skillets per month. The production costs are $5 per skillet for direct​ materials, $4 per skillet for direct​ labor, and $3 per skillet for manufacturing overhead. Iron HandlesIron Handles has 40 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40​% of the next​ month's sales. Selling and administrative expenses for this product line are $1,300 per month. Iron Handles is budgeted to produce 835 skillets in July with a $12 production cost per skillet. Compute the budgeted cost of goods sold for July.

A) $7,500
B) $10,020
C) $8,235
D) $10,500

4) Suppose Cook Pro manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $30. Cook Pro projects sales of 550 ​10-inch skillets per month. The production costs are $13 per skillet for direct​ materials, $4 per skillet for direct​ labor, and $1 per skillet for manufacturing overhead. Cook Pro has 30 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40​% of the next​ month's sales. Selling and administrative expenses for this product line are $1,900 per month. Cook Pro has budgeted cost of goods sold of $9,900 for July. Compute the budgeted gross profit for July.

A) $6,600
B) $5,700
C) $12,300
D) $13,200

Answer 1

Ques 1 The correct answer is B i.e. 650 skillets

Closing inventory = 575 x 20% = 115

Add: Sales for the month = 575

Less: Opening inventory = (40)

Thus, units to be produced in july = 115 + 575 - 40 = 650

Ques 2 The correct answer is B i.e. $20,930

Closing inventory = 675 x 40% = 270

Add: Sales for the month = 675

Less: Opening inventory = (35)

Thus, units to be produced in july = 270 + 675 - 35 = 910 units

Total cost = 910 x (13 + 4 + 6) = 910 x 23 = $20,930

Ques 3 The correct answer is A i.e. $7,500

Units sold = 625

Cost of goods sold = 625 x (5 + 4 + 3) = $7,500

Ques 4 The correct answer is  A i.e. $6,600

Gross profit = Sales - COGS

= (550 x 30) - 9,900

=$6,600