Use the following to answer questions 1, 2, and 3 on direct material and direct labor budgets:May Co. manufactures a product that requires 1 ounce of platinum to produce one unit of the product. The cost of platinum is approximately $360 per ounce. The company maintains an ending platinum inventory (raw material inventory) equal to 10% of the following month's production volume. The following data were taken from the most recent quarterly production budget:
July August September
Planned production in units 1,000 1,100 980
1. The number of ounces of platinum to be purchased in August is
2. The cost of platinum to be purchased in August is:
3. If it takes three hours of direct labor to produce one unit of the product and May Co.'s cost per one labor hour is $16, direct labor cost for August would be budgeted at:
following questions (Q4 and Q5) are independent.
4. Tara Company has the following historical collection pattern for its credit sales:
70% collected in month of sale
15% collected in the first month after sale
10% collected in the second month after sale
4% collected in the third month after sale
1% uncollectible
Budgeted credit sales for the last six months of 20x1 follow.
July $30,000
August 35,000
September 40,000
October 45,000
November 50,000
December 42,500
Calculate the estimated total cash collections during the year's fourth quarter (=from October to December) from sales made in the fourth quarter.
5. Adams Sporting Goods manufactures and sells bicycles throughout the southeastern United States. The following data were taken from the most recent quarterly sales forecast:
End-of-Month
Expected Sales Desired Inventory
April 1,400 units 315 units
May 1,575 units 412 units
June 1,650 units 425 units
On the basis of the information presented, how many units of bicycles should the company produce in May?