Chapter 22, Problem 4QC

Suppose Iron City manufactures cast iron skillets. One model is a 10-inch skillet that sells for $20. Iron City projects sales of 50010-inch skillets per month. The production costs are $9 per skillet for direct materials. $1 per skillet for direct labor, and $2 per skillet for manufacturing overhead. Iron City has 5010-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 20% of the next month's sales. Selling and administrative expenses for this product line are $1,500 per month.

4. How many 10-inch skillets should Iron City produce in July?

Learning Objective 3

a. 500 skillets
b. 550 skillets
c. 600 skillets
d. 650 skillets