Question

TB MC Qu. 8-146 Petrini Corporation makes one product ... Petrini Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations: a. The budgeted selling price per unit is $110. Budgeted unit sales for January, February, March, and April are 7,500, 10,600, 12,000, and 11,700 units, respectively. All sales are on credit. b. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month. c. The ending finished goods inventory equals 30% of the following month's sales. d. The ending raw materials inventory equals 10% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $4.00 per pound. e. Regarding raw materials purchases, 40% are paid for in the month of purchase and 60% in the following month. f. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.6 direct labor-hours. g. Manufacturing overhead is entirely variable and is $8.00 per direct labor-hour. h. The variable selling and administrative expense per unit sold is $1.70. The fixed selling and administrative expense per month is $70,000. The estimated finished goods inventory balance at the end of February is closest to:

Answer 1

Pege No. Dete * Calculation : - O tinished good inventory is 301. of following month sale, so ending inventory of finished goods of February = Boy-of march Endling Inu units - 304. of 12000 =3600 units Direct material = 3600 units X 5 Pounds of = $72000 $23 Direct - labor = 3600 units x 2.6 hox =$ 215280 $8 manufacturing OH = 3600 units x 2.6 hox = 8 74880 llotal cost of End Ind = = 72000 + 215280 +74880 9362160 4th option is correct. units are finished but not sold so selling e administrative expenses are not relevant.