Question

Suppose Chef Kitchen manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 28 . Chef Kitchen projects sales of 625 ​10-inch skillets per month. The production costs are $ 6 per skillet for direct​ materials, $ 3 per skillet for direct​ labor, and $ 5 per skillet for manufacturing overhead. Chef Kitchen has 60 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40 ​% of the next​ month's sales. Selling and administrative expenses for this product line are $ 1,000 per month.
Required:
1. How many 10-inch skillets should Chef Plus produce in July?

Answer 1

Answer:

production schedule for July = 815 10-inch skillets

Explanation:

price of 10-inch skillet $28

projected sales 625 units

costs:

• direct materials $6
• direct labor $3
• manufacturing overhead $5
• sales and administrative expenses $1,000

beginning inventory 60 units

ending inventory 40% of August sales

production during July = (projected sales - beginning inventory) + (40% x projected sales August) = (625 units - 60 units) + (40% x 625 units) = 565 units + 250 units = 815 10-inch skillets