Question

1. Grisham Products Inc. manufactures engines for small scooters. At 30 September, the company had 2500 engines in inventory. The company’s policy is to maintain an ending inventory equal to 8 per cent of next month’s sales. Each engine manufactured requires 45 minutes of assembly and inspecting time at a cost of $0.30 per minute. Grisham applies overhead to engines at a rate of $0.15 per direct labour minute.

   
   The company expects the following sales activity for the fourth quarter of the year:

   
   October 12 000 units

   November 20 000 units

   December 35 000 units

   
   What is the projected applied manufacturing overhead cost for November?

   		$126 900
   		$42 930
   		$153 900
   		$143 100

Answer 1

			production units for November
Expected sale units					20,000
Add:ending inventory 35000*8%					2800
total required units					22,800
less:Beginning inventory 20,000*8%					1600
total production units					21,200
Applied manufacturing overhead
total direct labor time required (45*21200=					954000
rate per hr					0.15
overhead applied					143100	answer