Preparing an Ending Finished Goods Inventory Budget Andrews Company manufactures
ID: 2445578 • Letter: P
Question
Preparing an Ending Finished Goods Inventory Budget
Andrews Company manufactures a line of office chairs. Each chair takes $14 of direct materials and uses 1.9 direct labor hours at $16 per direct labor hour. The variable overhead rate is $1.10 per direct labor hour and the fixed overhead rate is $1.50 per direct labor hour. Andrews expects to have 620 chairs in ending inventory. There is no beginning inventory of office chairs.
Required:
1. Calculate the unit product cost. (Note: Round to the nearest cent.)
$
2. Calculate the cost of budgeted ending inventory. (Note: Round to the nearest dollar.)
$
Explanation / Answer
Calculation of Unit Product Cost:
Cost of Ending Inventory = 620 x 49.34 = $30,590.80
Amount ($) Direct Material 14 Direct Labor (1.9 x 16) 30.40 Variable Overhead (1.10 x 1.9) 2.09 Fixed Overhead (1.50 x 1.9) 2.85 Total Per Unit Cost 49.34