Rokosz Corporation Makes One Product and It Provided the Following

question 80

Multiple Choice

Rokosz Corporation makes one product and it provided the following information to help prepare the master budget for the next four months of operations:
a. The budgeted selling price per unit is $104. Budgeted unit sales for October, November, December, and January are 6,900, 7,100, 11,300, and 15,300 units, respectively. All sales are on credit.
b. Regarding credit sales, 30% are collected in the month of the sale and 70% in the following month.
c. The ending finished goods inventory equals 20% of the following month's sales.
d. The ending raw materials inventory equals 30% of the following month's raw materials production needs. Each unit of finished goods requires 5 pounds of raw materials. The raw materials cost $2.00 per pound.
e. The direct labor wage rate is $23.00 per hour. Each unit of finished goods requires 2.5 direct labor-hours.
-The estimated direct labor cost for November is closest to:

• A) $320,000
• B) $182,620
• C) $456,550
• D) $19,850

---

Definitions:

Outstanding Shares

The total number of shares of a corporation that are currently owned by investors, including restricted shares owned by the company's officers and insiders.

Fair Value

An estimate of the market price of an asset or liability, based on the current market conditions and the asset's characteristics.

Goodwill

The intangible asset that arises when a company acquires another for a price higher than the fair value of its net identifiable assets.

Net Assets

The difference between total assets and total liabilities on a company's balance sheet, representing the owner's equity.