Can someone help in answering this question, please?

Watch this thread
Mark Blake
Badges: 2
Rep:
? You'll earn badges for being active around the site. Rep gems come when your posts are rated by other community members.
#1
Report Thread starter 4 years ago
#1
The Fitz Co. manufactures picnic tables and has a policy of maintaining a finished goods inventory equal to 40% of the next months planned sales. Each picnic table requires three hours of labour at a budgeted labour rate of £13 per hour. Planned sales for the months April, May and June are respectively 4,000, 5,000, and 3,000 units. What will be the budgeted direct labour cost for May?

Select one:
A. £163,800
B. £54,600
C. £226,200
D. £210,600
E. £179,400
0
reply
Stevo F
Badges: 18
Rep:
? You'll earn badges for being active around the site. Rep gems come when your posts are rated by other community members.
#2
Report 4 years ago
#2
(Original post by Mark Blake)
The Fitz Co. manufactures picnic tables and has a policy of maintaining a finished goods inventory equal to 40% of the next months planned sales. Each picnic table requires three hours of labour at a budgeted labour rate of £13 per hour. Planned sales for the months April, May and June are respectively 4,000, 5,000, and 3,000 units. What will be the budgeted direct labour cost for May?
Select one:
A. £163,800
B. £54,600
C. £226,200
D. £210,600
E. £179,400
So...
They keep finished goods inventory of 40% of next month's budgeted sales. The current month/month we need info for is May, meaning next month is June where they are budgeting 3,000 sales.

40% of 3,000 is 1,200.
Add in the 5,000 budgeted sales for May, less the 40% b/fwd stock based on May's budgeted sales, so:
1,200+5,000-(5,000*0.4)=4,200

Now that we have the goods that will need to be made in May, we know that each item uses 3 labour hours at a cost of £13 per hour.
4,200*3*13= 163,800, which is A.

If this isn't the right answer, or if you would like further explanation, let me know
0
reply
Mark Blake
Badges: 2
Rep:
? You'll earn badges for being active around the site. Rep gems come when your posts are rated by other community members.
#3
Report Thread starter 4 years ago
#3
Thanks so much
So...
They keep finished goods inventory of 40% of next month's budgeted sales. The current month/month we need info for is May, meaning next month is June where they are budgeting 3,000 sales.

40% of 3,000 is 1,200.
Add in the 5,000 budgeted sales for May, less the 40% b/fwd stock based on May's budgeted sales, so:
1,200+5,000-(5,000*0.4)=4,200

Now that we have the goods that will need to be made in May, we know that each item uses 3 labour hours at a cost of £13 per hour.
4,200*3*13= 163,800, which is A.

If this isn't the right answer, or if you would like further explanation, let me know [/QUOTE]
0
reply
X

Quick Reply

Attached files
Write a reply...
Reply
new posts
Back
to top
Latest

How are you feeling about your results?

They're better than I expected (69)
42.33%
They're exactly what I expected (37)
22.7%
They're lower than I expected (57)
34.97%

Watched Threads

View All