Mercury Bag Company produces cases of grocery bags. The managers at Mercury are

Question

Mercury Bag Company produces cases of grocery bags. The managers at Mercury are trying to develop budgets for the upcoming quarter. The following data have been gathered:

  

Prepare Mercury's manufacturing cost budget. (Round your cost per unit answer to 2 decimal places. Omit the "$" sign in your response.)

What is the projected ending value of the Inventory account? (Round intermediate calculations to 2 decimal places and your final answer to the nearest dollar amount. Omit the "$" sign in your response.)

  Projected sales in units 1,430 cases   Selling price per case $ 240   Inventory at the beginning of the quarter 150 cases   Target inventory at the end of the quarter 100 cases   Direct labor hours needed to produce one case 2 hours   Direct labor wages $ 10 per hour   Direct materials cost per case $ 8   Variable manufacturing overhead cost per case $ 6   Fixed overhead costs for the upcoming quarter $ 220,000

Explanation / Answer

Unit to produce

= Projected sales in units + Target inventory at the end of the quarter - Inventory at the beginning of the quarter

= 1430+100-150

= 1380

Direct labor Cost (1380*2*10) 27,600

Direct Material Cost (1380*8) 11,040

Variable manufacturing (1380*6) 8,280

Total variable Cost 46,920

Add: Fixed Manufacturing OVerhead 220,000

Total cost of finished goods manufactured 266,920

Manufacturing Cost Per Unit (266920/1380) 193.42

Ending Inventory Value = (193.42*100) 19,342

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