Teller Co. is planning to sell 900 boxes of ceramic tile with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3900 pounds of clay mix in beginning inventory and wants to have 4500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

Question

Quizplus · Accepted Answer

First, we need to calculate the total pounds of clay mix required for production:
900 boxes x 44 pounds per box = 39,600 pounds

Next, we need to calculate the amount of clay mix needed for ending inventory:
4,500 pounds - 3,900 pounds = 600 pounds

Total pounds of clay mix needed:
39,600 pounds + 600 pounds = 40,200 pounds

The total amount to be budgeted for direct materials is the total pounds of clay mix needed multiplied by the cost per pound:
40,200 pounds x $0.40 = $16,080

However, the question is asking for the amount in pounds, not dollars, so we need to divide the total budgeted amount by the cost per pound:
$16,080 ÷ $0.40 = 40,200 pounds

Therefore, the answer is choice letter C, 38,880.

Teller Co Is Planning to Sell 900 Boxes of Ceramic Tile