IRWIN TECH sales in June were 400,000 units. Sales are expected to increase by 2% each month during the next 2 months (July and August) and an additional 8,000 units in September from August amount. Selling price is $16 per unit. Expected sales in October are 420,000 units. The firm inventory policy is to maintain an ending inventory equal to 25% of next month sales. Actual inventory is 103,000 units. Each unit requirements are as follows: .75 pounds of materials per unit 36 minutes of labor per hour variable overhead is allocated as 60% of labor Material cost is $6 per pound, labor cost is $10.50 per hour and fixed overhead is $105,000 monthly. Budgeted production units for October are 430,000 units and actual materials inventory is 95,000 pounds. Materials inventory policy is 30% of next month production. Calculate expected direct materials cost in July.
IRWIN TECH sales in June were 400,000 units. Sales are expected to increase by 2% each month during the next 2 months (July and August) and an additional 8,000 units in September from August amount. Selling price is $16 per unit. Expected sales in October are 420,000 units. The firm inventory policy is to maintain an ending inventory equal to 25% of next month sales. Actual inventory is 103,000 units.
Each unit requirements are as follows:
.75 pounds of materials per unit
36 minutes of labor per hour
variable
Material cost is $6 per pound, labor cost is $10.50 per hour and fixed overhead is $105,000 monthly. Budgeted production units for October are 430,000 units and actual materials inventory is 95,000 pounds. Materials inventory policy is 30% of next month production.
Calculate expected direct materials cost in July.
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