Question

Teller Co. is planning to sell 900 boxes of ceramic tile, with production estimated at 870 boxes during May. Each box of tile requires 44 pounds of clay mix and a quarter hour of direct labor. Clay mix costs $0.40 per pound and employees of the company are paid $12.00 per hour. Manufacturing overhead is applied at a rate of 110% of direct labor costs. Teller has 3,900 pounds of clay mix in beginning inventory and wants to have 4,500 pounds in ending inventory. What is the total amount to be budgeted in pounds for direct materials to be purchased for the month?

A) 38,280

B) 37,680

C) 38,880

D) 40,200

Answer 1

Total= 38,880 pounds

Step-by-step explanation:

Giving the following information:

Production= 870 units

Required quantity= 44 pounds of clay

Beginning inventory= 3,900 pounds

Desired ending inventory= 4,500 pounds.

To calculate the direct material quantity required, we need to use the following structure:

Budgeted direct material (in pounds):

Production= 870*44= 38,280

Desired ending inventory= 4,500

Beginning inventory= (3,900)

Total= 38,880 pounds