8

question 5

Multiple Choice

8. 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.
Assume that the production target for February is 650 bears.What is the production budget for the month of February?

• A)$26,000
• B)$54,900
• C)$57,500
• D)$59,450
• E)None of the choices are correct

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Definitions:

Purchasing Goods

The process of acquiring products or commodities for use, sale, or incorporation into further manufacturing or service delivery.

Carrier's Ability

A transportation or logistics company's capacity to provide effective delivery services, including speed, reliability, and coverage.

Distribution Center

A facility that handles the receiving, storage, and distribution of goods to various destinations or stores.

Multimodal Transportation

The use of two or more modes of transport to move goods or passengers from one place to another.