Question

Meridian Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3300 units of Prime and 1100 units of Luxuria in 2016. The following estimates are given for 2016: Prime La Selling price $200 $500 Direct maters 20 90 Direct labor 50 190 Manufacturing overhead 50 150 Meridian had an inventally of 250 units of Prime and 115 units of Luxuria at the end of 2015. It has decided that as a measure to counter stock outages it will maintain ending inventory of 370 units of Prime and 220 units of Luxuria Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of 10. There were 140 units of Crimpson in stock at the end of 2015. The management does not want to have any stock of Crimpson at the end of 2016. What is the total budgeted cost of goods manufactured in 2016? 5998,650 5869,000 5928,550 5809,450

Answer 1

Option(C) $928,550 is the correct answer Luxuria 1,100 Meridian Industries Production Budget For the Year ended 2016 Prime Expected Sales (units) 3,300 Add: Desired Ending units of Inventoy 370 Total Required units 3,670 Less: Opening units of Inventory 250 Required production 3,420 220 1,320 115 1,205 Calculation of Cost of goods manufactured Prime Direct material (3,420 * $20) $68,400 Direct Labor (3,420 * $50) $171,000 Manufacturing overhead (3,420 * $50) $171,000 Total Cost $410,400 Luxuria (1,205 * $90) $108,450 (1,205 * $190) $228,950 (1,205 * $150) $180,750 $518,150 Total $176,850 $399,950 $351,750 $928,550