Question

# 1. Coles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material...

1. Coles Corporation, Inc. makes and sells a single product, Product R. Three yards of Material K are needed to make one unit of Product R. Budgeted production of Product R for the next five months is as follows:

 August 14,000 units September 14,500 units October 15,500 units November 12,600 units December 11,900 units

The company wants to maintain monthly ending inventories of Material K equal to 20% of the following month's production needs. On July 31, this requirement was not met since only 2,500 yards of Material K were on hand. The cost of Material K is \$0.85 per yard. The company wants to prepare a Direct Materials Purchase Budget for the rest of the year.

The total cost of Material K to be purchased in August is:

Multiple Choice

• \$40,970

• \$48,200

• \$33,840

• \$42,300

2. The Charade Corporation is preparing its Manufacturing Overhead budget for the fourth quarter of the year. The budgeted variable manufacturing overhead is \$5.00 per direct labor-hour; the budgeted fixed manufacturing overhead is \$75,000 per month, of which \$15,000 is factory depreciation.

If the budgeted direct labor time for November is 7,000 hours, then the total budgeted manufacturing overhead for November is:

Multiple Choice

• \$95,000

• \$110,000

• \$75,000

• \$125,000

#### Homework Answers

Answer #1
 Answer: 1) Particulars August Budgeted production 14,000 Raw materials in yard 3 Total Raw materials production 42,000 Add : Ending inventory                 ( 14,500 x 3 x 20% ) 8,700 Total needs of Production 50,700 Less : Beginning inventory (2,500) Total 48,200 Cost of material \$ 0.85 Total cost of Material K to be Purchased in August \$ 40,970 Option (a) is Correct 2) Variable manufacturing overhead      = Variable manufacturing overhead per DLH x Budgeted DLH's      =   \$ 5 x 7,000 Hours \$ 35,000 Fixed manufacturing overhead \$ 75,000 Budgeted manufacturing overhead \$ 110,000 Option (b) is Correct
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