Barrington Bears Has Developed the Following Sales Forecasts for the Next

question 9

Multiple Choice

Barrington Bears has developed the following sales forecasts for the next few months.January 500,February 600,March 720,April 800 and May 770.BB has 80 bears on hand on Dec.31.Normal ending inventory policy is to hold 20% of next month's sales. Each bear needs 0.8 yards of fabric and two pounds of stuffing.Fabric is budgeted to cost $15 per yard and stuffing $4 per pound.Direct labor is paid $18 per hour.Each bear takes 40 minutes to hand-finish.Variable overhead totals $21 per direct labor hour.Fixed overhead amounts to $25,000 per month.
Eighty yards of fabric and 100 pounds of stuffing were in stock at year-end.Ten percent and 25% of next month's stuffing and fabric needs respectively are planned for raw materials ending inventory each month.
What is the budgeted amount for direct labor and variable overhead for January?

• A)$24,336
• B)$18,252
• C)$14,040
• D)$21,060
• E)None of the choices are correct

Learn the principles guiding make or buy, and special order decisions.

Acknowledge the concept of sales mix and its impact on business strategy.

Recognize the difference between incremental costs and sunk costs in various business scenarios.

Grasp the concept and calculation of markup percentage and its relevance in pricing strategies.

---

Definitions:

Mental Age

A measure of an individual's cognitive development, expressed as the age at which an average individual reaches the same level of mental performance.

Chronological Age

The number of years a person has lived, as measured from their birth to a given date.

Cultural Biases

Prejudices or predispositions toward or against certain cultures, often influencing perceptions and behaviors unconsciously.

Metacognition

Awareness and understanding of one's own thought processes, or thinking about thinking.