Question

Darke Corporation makes one product and has provided the following information: Budgeted unit sales for October, November, and December are 7,600, 9,000, and 10,100 units respectively. The ending finished goods inventory equals 40% of the following month's sales. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $1.00 per pound. The direct labor wage rate is $19.00 per hour. Each unit of finished goods requires 3.0 direct labor-hours. Manufacturing overhead is entirely variable and is $11.00 per direct labor-hour. The estimated finished goods inventory balance at the end of November is closest to:

Answer 1

Answer:

The estimated finished goods inventory balance at the end of November is closest to: $383,800.

Explanation:

First calculate the units of ending finished goods inventory for November

units of ending finished goods inventory = 10,100 × 40%

                                                                    = 4,040 units

The determine the unit standard cost

Raw materials ( 5 × $1.00)                                          =   $5.00

Direct labor (3.0 × $19.00)                                          = $57.00

Manufacturing overhead : Variable (3.0 ×$11.00)     = $33.00

Unit Standard Cost                                                     = $95.00

Finished goods inventory balance

Finished goods inventory balance = units of ending finished goods inventory × unit standard cost

                                                          =  4,040 units × $95.00

                                                          =  $383,800