Keegan Company Manufactures a Single Product and Has a JIT

question 22

Multiple Choice

Keegan Company manufactures a single product and has a JIT policy that ending inventory must equal 10% of the next month's sales. It estimates that May's ending inventory will consist of 20,000 units. June and July sales are estimated to be 280,000 and 290,000 units, respectively. Keegan assigns variable overhead at a rate of $1.80 per unit of production. Fixed overhead equals $400,000 per month. Compute the number of units to be produced and use to compute the total budgeted overhead that would appear on the factory overhead budget for month ended June 30.

• A) $520,200.
• B) $920,200.
• C) $922,000.
• D) $904,000.
• E) $905,800.

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Definitions:

Test Statistic

A statistic calculated from sample data, used to determine whether to reject the null hypothesis.

Coin

A flat, typically round piece of metal with an official stamp, used as money.

Heads

One of the two possible outcomes when flipping a standard coin, the other being tails.

Chi-Square Distribution

A statistical distribution that is used to describe the distribution of a sum of the squares of k independent standard normal random variables, useful in hypothesis testing and constructing confidence intervals.