Trago Company Manufactures a Single Product and Has a JIT

question 97

Multiple Choice

Trago Company manufactures a single product and has a JIT policy that ending inventory must equal 5% of the next month's sales.It estimates that May's ending inventory will consist of 14,000 units.June and July sales are estimated to be 280,000 and 290,000 units,respectively.Trago assigns variable overhead at a rate of $1.80 per unit of production.Fixed overhead equals $400,000 per month.Compute the total budgeted overhead for June.

• A)$920,200.
• B)$904,900.
• C)$930,100.
• D)$922,000.
• E)$878,800.

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Definitions:

Operating Expenses

Costs necessary for a company to conduct its day-to-day operations, excluding the cost of goods sold (COGS).

Transfer Prices

Prices charged for the sale of goods or services between divisions within the same company, often used for cost allocation and performance evaluation.

Segments

Different parts or areas of a business or market that can be separately analyzed.

ROI

Return on Investment is a measure used to evaluate the efficiency or profitability of an investment, calculated by dividing net profit by the cost of the investment.