Accounting · Production Budgeting
Ratty has budgeted next month's sales at 2,500 units. Finished goods inventory is budgeted to increase from 2,000 units (opening) to 2,500 units (closing). Raw materials inventory will increase from 400 kilos to 1,400 kilos. There is no work-in-progress. Each item of finished goods requires 2 kilos of direct material at $3/kilo and 1 hour of direct labor at $11/hour. Factory overhead is applied at $7 per direct labor hour. What is the expected production cost for next month?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1$75,000
- 2$72,000✓
- 3$57,600
- 4$51,000
Correct answer
$72,000
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