Percy's Pickled Snacks produces several types of pickled vegetables.The company budgets for each quarter in the last month of the previous quarter.In early March,Percy is preparing the budget for pickled beets.Budgeted sales are 12,000 jars for April,16,000 jars for May,and 19,000 jars for June.Each jar requires 1.2 pounds of beets.The pickling process takes 60 minutes for 20 jars.Because pressurized cooking is used,the processing is monitored by an employee at all times.Each jar of pickled beets sells for $15.00. Percy requires ending Finished Goods inventory equal to 25% of the following month's sales.Other information is as follows:
What is Percy's overhead budget for April?
A)$27,000
B)$29,250
C)$36,000
D)$20,250

Question

Percy's Pickled Snacks produces several types of pickled vegetables.The company budgets for each quarter in the last month of the previous quarter.In early March,Percy is preparing the budget for pickled beets.Budgeted sales are 12,000 jars for April,16,000 jars for May,and 19,000 jars for June.Each jar requires 1.2 pounds of beets.The pickling process takes 60 minutes for 20 jars.Because pressurized cooking is used,the processing is monitored by an employee at all times.Each jar of pickled beets sells for $15.00. Percy requires ending Finished Goods inventory equal to 25% of the following month's sales.Other information is as follows:
 What is Percy's overhead budget for April?
A)$27,000 
B)$29,250 
C)$36,000 
D)$20,250

Quizplus · Accepted Answer

To calculate Percy's overhead budget for April, we need to determine the number of direct labor hours needed to produce the budgeted sales for that month.

For April, the budgeted sales are 12,000 jars. Each jar requires 60 minutes/20 jars = 3 minutes of direct labor time. Therefore, 12,000 jars x 3 minutes per jar = 36,000 minutes.

To convert minutes to hours, we divide by 60: 36,000 minutes / 60 = 600 hours.

Therefore, Percy's overhead budget for April is:

600 hours x $48.75 per hour = $29,250

where $48.75 is the total direct labor cost per hour (including wages, benefits, and payroll taxes) as calculated in the previous question.

So the best choice is B, with the above explanation.

Percy's Pickled Snacks Produces Several Types of Pickled Vegetables