Question

Legalos Company makes and sells a single product. It takes seven pounds of
direct materials to produce one unit of this product. Budgeted production
for the next three months is given below:

                  Budgeted Units to be Produced            
February                  18,500 units
March                     19,200 units
April                     14,300 units

The company wants to maintain monthly ending inventories of direct materials
that are equal to 54% of the following month's production needs. The cost of
direct materials is $1.50 per pound.

1. Calculate the total cost of direct materials budgeted to be purchased in
February.

Detmer Enterprises has the following budgeted sales:

                  Budgeted Sales in Units
June                   6,800 units
July                   5,100 units
August                 4,400 units
September              3,700 units

Past experience has shown that the ending finished goods inventory for
each month should be equal to 25% of the next month's expected sales in
units. Additionally, it is known that every unit produced requires four
direct labor hours to make and direct laborers are paid $15 per hour.

Assume that Detmer pays 65% of its direct labor in the same month the
employee works, pays 30% of its direct labor in the month after the
employee works, and the final 5% is paid two months after the employee
works.

2. Calculate Detmer Enterprises' budgeted salaries payable at August 31.

Answer 1