Question

Berry's Boxes manufactures boxes. It expects to sell 20,000 boxes in 2015. The company had enough beginning inventory of direct materials to produce 24,000 units. Beginning inventory of finished units totalled 2,000 with a target ending inventory of 2,500 units. The boxes sell for $3.00 and the company keeps no work-in-process inventory. Direct materials costs for each box total $1.00 while direct labour is $0.50. Factory overhead is $0.20 per box.


What will be Berry's Boxes production costs incurred for direct materials, direct manufacturing labour, and manufacturing overhead, respectively, for 2015?

		$22,500; 11,250; $4,500
		$20,500; $10,250; $4,100
		$19,500; $9,750; $3,900
		$12,000; $6,000; $4,800
		$10,000; $5,000; $4,000

Answer 1

We need to first find out budgeted production of boxes to solve the question.

Budgeted production of boxes can be found out by adding Target ending inventory and Expected sales and by reducing beginning inventory.

And then we can multiply budgeted production of boxes with respective cost per box.