Sevenbergen 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
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs.
-The estimated direct labor cost for August is closest to:

Question

Sevenbergen 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
Raw materials purchases are paid:
30% in the month of purchase
70% in the following month
The ending finished goods inventory should equal 20% of the following month's sales. The ending raw materials inventory should equal 30% of the following month's raw materials production needs.
-The estimated direct labor cost for August is closest to:

Quizplus · Accepted Answer

The budgeted required production for August is computed as follows:
 11ea7761_17b6_7dce_81a5_ff8f659a6f02_TB2580_00 *September sales of 10,400 units × 20% = 2,080 units
** August sales of 11,300 units × 20%= 2,260 units
The estimated direct labor cost for August is computed as follows:
 11ea7761_17b6_a4df_81a5_ede1197a6a2a_TB2580_00

Sevenbergen Corporation Makes One Product and Has Provided the Following