Chapter 22, Problem 5QC

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.

5. Compute the total amount budgeted for product costs for July.

Learning Objective 3

a. $6,000
b. $6,500
c. $6,600
d. $7,200