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:

Production Period

The time frame during which goods are manufactured or services are rendered, from the beginning of production to its completion.

Beginning Finished Goods Inventory

The value of a company’s finished goods inventory at the start of an accounting period before any sales or production.

Finished Goods Inventory

Inventory that has completed the manufacturing process but has not yet been sold to customers.

Cost of Goods Sold

Costs incurred directly from the production of goods a company offers for sale, covering material and labor expenses.