Question

Question 12

Use the information below to answer the following question(s).

Marguerite Inc.. expects to sell 20,000 pool cues for $20.00 each. Direct materials costs are $2.00, direct manufacturing labour is $12.00, and manufacturing overhead is $0.80 per pool cue. Each pool cue requires 0.5 kilograms (kg) of material which is all added at the start of production. The units in work-in-process beginning and ending inventory were half complete as to direct labour and manufacturing overhead costs; the units in beginning inventory are completed before new units are started.. Each pool cue requires one hour of direct labour, and manufacturing overhead is allocated based on direct labour hours. The following inventory levels are expected to apply to 2016: Beginning inventory Ending inventory Direct materials 800 kg 1,000 kg Work-in-process inventory 200 units 300 units Finished goods inventory 2,000 units 2,500 units What are the 2016 budgeted costs for direct manufacturing labour?

Question 12 options:

1-$246,000

2-$249,000

3-$247,200

4-$248,000

5-$246,600

Answer 1

Expected unit sales	20000
Add:Ending Finished goods inventory	2500
Less:Beginning finished goods inventory	-2000
Cost of goods manufactured	20500

Using FIFO method (Units started first are transferred out ).Beginning work in process inventory and ending work in process inventory is 50% complete as to Labor.

Also out of units transferred out ,200 units is from beginning work in process inventory and remaining units are from 20500-200 = 20300 current period production.

Current period production
Beginning work in process (200*50%)	100
Current month	20300
Ending work in process (300*50%)	150
Equivalent current month production	20550

cost of direct labor = 20550*12 = $246600

Correct option is "5"-246600