Atlas Company plans to sell 145,000 units in November and 190,000 units in December.Atlas's policy is that 15% of the following month's sales must be in ending inventory.On November 1, there were 21,750 units in inventory. It takes 35 minutes of direct labor time to make one unit.Direct labor wages average $19 per hour.Variable overhead is applied at the rate of $7 per direct labor hour.Fixed overhead is budgeted at $60,500 per month.What is the budgeted production in units for November?

Question

Quizplus · Accepted Answer

Units to be produced in the month of November = Expected unit sales for the month of November + Units in desired ending inventory* - Units in beginning inventory
Units to be produced in the month of November = 145,000 units + (0.15 × 190,000 units) - 21,750 units = 151,750 units
*Units in desired ending inventory = (Expected unit sales for the month of December × 10%)

Atlas Company Plans to Sell 145,000 Units in November and 190,000