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Ikon Equipment produces exercise equipment. The following schedule reveals anticipated monthly production of bicycles for the...

Ikon Equipment produces exercise equipment. The following schedule reveals anticipated monthly

production of bicycles for the first three months of the year:

January 12,000

February 15,000

March 13,000

Ikon budgets for 4 direct labor hours per bicycle, at an average cost of $17.00 per hour. Variable factory overhead is applied at the rate of $11.00 per direct labor hour. Fixed overhead is expected to run $120,000 per month, which includes $11,000 per month of noncash expenses related to depreciation.

Determine the total expected monthly cash outflow for labor and overhead.

A.

January Expected cash outflow

                1,298,000

February Expected cash outflow

                1,585,000

March Expected cash outflow

                1,399,000
B.

January Expected cash outflow

                1,453,000

February Expected cash outflow

                1,789,000

March Expected cash outflow

                1,565,000
C.

January Expected cash outflow

                1,212,000

February Expected cash outflow

                1,450,000

March Expected cash outflow

                1,354,000
D.

January Expected cash outflow

                1,489,000

February Expected cash outflow

                1,780,000

March Expected cash outflow

                1,550,000
E.

January Expected cash outflow

                1,356,000

February Expected cash outflow

               1,534,000

March Expected cash outflow

                1,896,000
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Answer is highlighted in yellow: Solution: Option B Answer: Explanation: Unit produced Labor cost Total Budgeted labor hours

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