Chapter 22, Problem 7QC

Suppose Iron City manufactures cast iron skillets. One model isa 10-inch skillet that sells for $20. Iron City projects sales of 500 10-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.
7. Compute the budgeted gross profit for July.

Learning Objective 4

a. $6,000
b. $5,000
c. $4,000
d. 3,000