Hesterman Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
Credit sales are collected:
40% in the month of the sale
60% in the following month
The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month's raw materials production needs.
-The estimated direct labor cost for May is closest to:

Question

Hesterman Corporation makes one product and has provided the following information to help prepare the master budget for the next four months of operations:
   Credit sales are collected:
40% in the month of the sale
60% in the following month
The ending finished goods inventory should equal 40% of the following month's sales. The ending raw materials inventory should equal 20% of the following month's raw materials production needs.
-The estimated direct labor cost for May is closest to:

Quizplus · Accepted Answer

The budgeted required production for May is computed as follows:
 11ea7761_17b1_4d90_81a5_911e9aa5dcb6_TB2580_00 *June sales of 14,000 units × 40% = 5,600 units
** May sales of 9,400 units × 40%= 3,760 units
The estimated direct labor cost for May is computed as follows:
 11ea7761_17b1_4d91_81a5_e96ed94fdb65_TB2580_00

Hesterman Corporation Makes One Product and Has Provided the Following