Carteret Inc. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour.
Refer to the Carteret Inc. information above. The cost of the rope cord that should be purchased in May is:

Question

Carteret Inc. Carteret Inc. manufactures hammocks under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced:
 Each unit requires 30 feet of cotton rope cord which costs $.50 per foot. The company has determined that it needs 20 percent of next month's raw material needs on hand at the end of each month.
In addition, each hammock requires 45 minutes of direct labor for assembly and inspection at a cost of $.25 per minute. The company currently applies manufacturing overhead to production at the rate of $8 per direct labor hour.
Refer to the Carteret Inc. information above. The cost of the rope cord that should be purchased in May is:

Quizplus · Accepted Answer

To calculate the cost of rope cord that should be purchased in May, we need to follow these steps:

1. Determine the total number of hammocks to be produced in the second quarter.

From the production budget, we know that the number of hammocks to be produced in the second quarter is:

11eaa638_ff9b_5252_842f_d5398215aaa4_TB5685_00

2. Determine the total amount of rope cord required.

Each unit requires 30 feet of cotton rope cord, so the total amount of rope cord required is:

11eaa638_ff9b_5252_842f_d5398215aaa4_TB5685_00 x 30 = 330,000 feet

3. Determine the cost of one foot of rope cord.

The cost of one foot of rope cord is given as $.50.

4. Determine the total cost of rope cord required.

The total cost of rope cord required is:

330,000 x $.50 = $165,000

Therefore, the cost of the rope cord that should be purchased in May is $165,000.