Question

Alpha company anticipated unit sales of widgets are January, 5,000; February, 4,000; and March 8,000. Alpha consistently maintained finished goods inventory at 80% of the following month's sales. The historic total unit cost has been $10 for each unit produced. Use this information to determine the total cost of completed production for: (Round & enter final answers to: the nearest whole dollar for total dollar answers, nearest penny for unit costs or nearest whole number for units) 1. January 2. February

Answer 1

Answer:

Total costs of Completed Production

January = $40,000

February = $72,000

Explanation:

Provided sales for the month in units

January 5,000 units

February 4,000 units

March 8,000 units

Provided Inventory maintained = 80% of following month's sale

Cost per unit = $10

For the month of January

Opening Inventory  = 5,000 $\times$ 80% = 4,000 units

Cost of goods produced in January = 20% of current month's sales = 1,000 units

And following month February's 80% = 4,000 $\times$ 80% = 3,200

total units produced in January = 1,000 +3,200 = 4,200 @ $10

Total cost = 4,000 $\times$ $10 = $40,000

For the month of February

Current month sales 20% and following month sales 80%

Current = 4,000 $\times$ 20% = 800 units

Following month = 8,000 $\times$ 80% = 6,400 units

Total production = 800 + 6,400 = 7,200 units

Total cost = 7,200 $\times$ $10 = $72,000

Total costs of Completed Production

January = $40,000

February = $72,000