Question

Suppose Chef City manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 32. Chef City projects sales of 650 ​10-inch skillets per month. The production costs are $ 10 per skillet for direct​ materials, $ 3 per skillet for direct​ labor, and $ 4 per skillet for manufacturing overhead. Chef City has 40 ​10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 30​% of the next​ month's sales. Selling and administrative expenses for this product line are $ 1 comma 600 per month. Chef City is budgeted to produce 805 skillets in July. Compute the total amount budgeted for product costs for July.

Answer 1

$13,600

Step-by-step explanation:

The solution of the total amount budgeted for product costs for July is provided below:-

Budgeted for product costs for July = Number of skillets × (Direct material + Direct labor + Cost of manufacturing overhead)

= 805 × ($10 + $3 + $4)

= 805 × $17

= $13,600

So, we have calculated the total amount budgeted for product costs for July by using the above formula.