Question

Suppose Cook Plus manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 24. Cook Plus projects sales of 675 ​10-inch skillets per month. The production costs are $ 5 per skillet for direct​ materials, $ 3 per skillet for direct​ labor, and $ 6 per skillet for manufacturing overhead. Cook Plus has 60 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20​% of the next​ month's sales. Selling and administrative expenses for this product line are $ 1 comma 600 per month. How many​ 10-inch skillets should Cook Plus produce in​ July?

Answer 1

Answer:

Production= 750 units

Explanation:

Giving the following information:

Cook Plus projects sales of 675 ​10-inch skillets per month.

Cook Plus has 60 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20​% of the next​ month's sales.

TO calculate the production required, we need to use the following formula.

Production= sales + desired ending inventory - beginning inventory

Production= 675 + (0.2*675) - 60

Production= 750 units