Grisham Products Inc. manufactures engines for small scooters. On September 30, the company had 1,050 engines in inventory. The company's policy is to maintain an ending inventory equal to 15% of next month's sales. Each engine manufactured requires 20 minutes of assembly and inspecting time at a cost of $1.50 per minute. Grisham applies overhead to engines at a rate of $2.50 per direct labor minute. The company expects the following sales activity for the fourth quarter of the year:
What is the projected applied manufacturing overhead cost for November?
A) $408,125
B) $843,625
C) $631,375
D) $737,500

Question

Grisham Products Inc. manufactures engines for small scooters. On September 30, the company had 1,050 engines in inventory. The company's policy is to maintain an ending inventory equal to 15% of next month's sales. Each engine manufactured requires 20 minutes of assembly and inspecting time at a cost of $1.50 per minute. Grisham applies overhead to engines at a rate of $2.50 per direct labor minute. The company expects the following sales activity for the fourth quarter of the year:
 What is the projected applied manufacturing overhead cost for November?
A) $408,125 
B) $843,625 
C) $631,375 
D) $737,500

Quizplus · Accepted Answer

The Answer of Grisham Products Inc. manufactures engines for small scooters. On September 30, the company had 1,050 engines in inventory. The company's policy is to maintain an ending inventory equal to 15% of next month's sales. Each engine manufactured requires 20 minutes of assembly and inspecting time at a cost of $1.50 per minute. Grisham applies overhead to engines at a rate of $2.50 per direct labor minute. The company expects the following sales activity for the fourth quarter of the year:
 What is the projected applied manufacturing overhead cost for November?
A) $408,125 
B) $843,625 
C) $631,375 
D) $737,500