Sleeter Corporation Makes One Product and It Provided the Following

question 86

Multiple Choice

Sleeter Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:

a.Budgeted unit sales for April, May, June, and July are 7,500, 11,900, 10,800, and 14,800 units, respectively.All sales are on credit.

b.The ending finished goods inventory equals 30% of the following month's sales.

c.The ending raw materials inventory equals 30% of the following month's raw materials production needs.Each unit of finished goods requires 6 pounds of raw materials.The raw materials cost $5.00 per pound.

If 72,000 pounds of raw materials are required for production in June, then the budgeted cost of raw material purchases for May is closest to:

• A)$559,230
• B)$455,100
• C)$350,970
• D)$347,100

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Definitions:

Direct Materials

Direct materials are raw inputs that are directly consumed in the manufacturing process of a product and can be directly attributed to that product.

Direct Labor

The labor cost of workers directly involved in the production of goods or services.

Process Costing

An accounting methodology that traces and accumulates direct costs, and allocates indirect costs, of a manufacturing process, costing each process separately.

Equivalent Units

A concept in cost accounting used to allocate costs to partially completed goods, converting them into the amount of finished goods units that could have been produced with those costs.