Question

Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots in 2007. The company had enough beginning inventory of direct materials to produce 48,000 units. Beginning inventory of finished units totalled 4,000 with a target ending inventory of 5,000 units. The flowerpots sell for $6.00 and the company keeps no work-in-process inventory. Direct materials costs for each flowerpot total $2.00 while direct labour is $1.00. Factory overhead is $0.40 per flowerpot.


What will be Country Heather's total costs incurred (ie charged to work in process) for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2007?

		$82,000; $41,000; $16,400
		$84,000; $40,000; $16,400
		$80,000; $40,000; $16,000
		$0; $40,000; $16,000
		$0; $41,000; $16,000

Answer 1

The answer is S82,000, 41,000, 16,400 Calculation of number of units to be produced Beginning inventory of finished units Expected number of finished units to be sold 40,000 units Ending inventory of finished units = 4.000 units 5,000 units Number of units sold- Beginning inventory of finished units + Number of units to be produced - Ending inventory of finished units Above formula can be rewritten as follows: Number of units to be produced Number of units sold Beginning inventory of finished units +Ending inventory of finished units 40,000 units-4,000 units + 5,000 units 41,000 units Direct material cost = Number of units to be produced x Material cost per unit -41,000 units x $2 = $82,000 Direct labor cost Numbcr of units to bc produccd x Labor cost per unit 41,000 units x $1 $41,000 Manufacturing Overhead -Number of units to be produced x Factory (or) manufacturing overhead cost per unit -41,000 units x S0.40 $16,400