Pacesetters, Inc., has actual sales for July and August and forecasted sales for September, October, November, and December as follows:
a) The firm's policy is to have finished goods inventory on hand at the end of the month that is equal to 70 percent of the next month's sales. It is currently estimated that there will be 4,200 units on hand at the end of August. Calculate the number of units to be produced in each of the months of September, October, and November.
b) Each unit of finished product requires 6.5 pounds of raw materials. The firm's policy is to have raw material inventory on hand at the end of each month that is equal to 60 percent of the next month's estimated usage. It is currently estimated that 26,000 pounds of raw materials will be on hand at the end of August. Calculate the number of pounds of raw materials to be purchased in each of the months of September and October.
Problem 3- 5 Points
The standards for one carton of Flavor Rite are:
During the week ended May 17, the following activity took place:
• 4,800 lbs. of raw material were purchased for inventory at a cost of $5.60 per pound;
• 1,200 cartons of finished product were produced;
• 4,020 lbs. of raw material were used;
• 3,110 labor hours were worked at a total cost of $26,435.
Calculate each of the following variances:
(a.) Raw materials purchase price variance.
(b.) Raw materials usage variance.
(c.) Direct labor rate variance.
(d.) Direct labor efficiency variance:
Presented below is the income statement for Ackee Food Center for the month of July:
Based on an analysis of cost behavior patterns, it has been determined that the company's contribution margin ratio is 15 percent.
(a.) Rearrange the above income statement to the contribution margin format.
(b.) If sales increase by 10 percent, what will be the firm's operating income?
(c.) Calculate the amount of revenue required