DuraBlend First Aid Started Operations on January 1, 2017 $$\begin{array} { l l } \text { January } & 6,000 \\\text { February } & 8,000 \\\text { March } & 7,000 \\\text { April } & 9,000\end{array}$$

question 114

Multiple Choice

DuraBlend First Aid started operations on January 1, 2017.On that date, the only assets were cash of $13,000, and inventory of $600 consisting of direct materials.The company sells first aid kits for $18 each.Additional information concerning the company's operations follows:
-Variable costs of production are $5 for each kit consisting of direct materials of $2.00, direct labor totaling $1.80, and $1.20 per unit in variable overhead.
-Other expenses include $1 per first aid kit in variable selling expenses, $22,000 per month in fixed production costs, and $14,000 per month in fixed selling and administration costs.
-Sales are collected 40% in the month of sales and 60% in the month after the sale.
-All expenses are paid in the month they are incurred except materials that are paid in the month following purchase.
-The company plans its ending inventory of first aid kits to be 20% of the units to be sold during the next month.Direct material inventory is budgeted to be equal to 10% of the next month's production requirements.
-Sales in units are forecasted as follows: $$\begin{array} { l l } \text { January } & 6,000 \\\text { February } & 8,000 \\\text { March } & 7,000 \\\text { April } & 9,000\end{array}$$
How many first aid kits will the company produce in February?

• A)7,800 units
• B)7,400 units
• C)9,400 units
• D)8,200 units

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