Question

Country Heather manufactures flowerpots. It expects to sell 40,000 flowerpots in 2007. The company had enough...

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.


How many flowerpots should Country Heather produce in 2007?

41,000 flowerpots

48,000 flowerpots

18,000 flowerpots

39,000 flowerpots

44,000 flowerpots

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Answer #1

Number of units to be produced = Ending finished goods inventory + Number of units to be sold - Beginning finished goods inventory

= 5,000 + 40,000 - 4,000

= 41,000

Correct option is (a) i.e 41,000 flowerpots

Hence, 41,000 flowerpots should Country Heather produce in 2007

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