The Manzoni Corporation manufactures and sells a single product. They are in the process of preparing next quarter's budget and have provided the following data.
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Finished goods inventory, July 1
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2,000 units
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Desired finished goods inventory, July 31
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2,500 units
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Desired finished goods inventory, August 31
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2,400 units
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Projected sales, July
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6,000 units
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Projected sales, August
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7,500 units
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Raw material required per unit
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5 pounds
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Estimated raw material cost
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$9 per pound
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Direct labor required per unit
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2 hours
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Estimated direct labor rate
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$16 per hour
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Factory overhead rate (based on direct labor)
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$12 per hour
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Company policy is to have enough material on hand at the end of each month to meet 30% of the following month's production needs.
a. How many pounds of material does Manzoni plan to purchase in July?
b. What is the budgeted August 31 finished goods inventory balance (in dollars)?