Question

Suppose Steel Clly manufactures cast iron skillets, One model is a 10 inch s et that sells for $34. Steel City projects sales of 650 10-inch skillets per month The production costs are 513 per skillet for direct materials. 52 per skillet for direct labor, and 51 per skillet for manufacturing overhead. Stol City has 35 10 inch sits in Inventory at the beginning of July but wants to have an ending inventory equal to 30% of the next month's sales Selling and administrative expenses for this products are $1 800 per month How many 10-inch skillets should Steel City produce in July? A. 845 skilets OB. 810 skies OC 880 sets OD, 650

Answer 1

B. 810 Skillets

Projected sales- 650 skillets ---------------------(1)

add: Closing inventory- 30% of 650=195 skillets-------(2)

Less :opening inventory- 35 Skillets-----------------(3)

So 10 inch skillets company needs to produce are (1)+(2)-(3)

=650+195-35

=810skillets