Grady manufactures medical supply kits. Projected production for the first months of production are (hint: no beginning
Question:
Grady manufactures medical supply kits. Projected production for the first months of production are (hint: no beginning inventory for October):
Oct production 17,000
Nov production 20,000
There are four materials per kit at a cost of $1.54 each. The company desires to have enough materials on hand at month end to supply 20% of next month's production. Payments for material purchases are made 50% in the month purchased and the rest in the next month.
Each kit uses 1.35 hours of direct labor at $15.00 per hour, payable in the month worked. Indirect costs are fixed per month at $88,000 and includes $20,000 of depreciation, and are payable in the month incurred.
What should they budget for cash payments for production costs in October?
Horngrens Financial and Managerial Accounting
ISBN: 978-0133866292
5th edition
Authors: Tracie L. Nobles, Brenda L. Mattison, Ella Mae Matsumura