ChatGPT 4
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 for manufacturing overhead for the month?
a. $2,871
b. $2,970
c. $11,484
d. $11,880
ChatGPT
To solve this problem, we need to calculate the total direct labor cost first and then apply the manufacturing overhead rate to get the manufacturing overhead for the month.
Direct Labor Cost Calculation:
Each box requires a quarter hour of direct labor.
Teller Co. plans to produce 870 boxes.
Direct labor cost per hour is $12.00.
Total direct labor hours required = 870 boxes * 0.25 hours/box = 217.5 hours
Total direct labor cost = 217.5 hours * $12.00/hour = $2,610
Manufacturing Overhead Calculation:
Overhead is applied at 110% of direct labor costs.
Manufacturing overhead = 110% * $2,610 = 1.10 * $2,610 = $2,871
Therefore, the total amount to be budgeted for manufacturing overhead for the month is $2,871, which corresponds to answer a. $2,871.
Hygeia Health expects to sell 460 units of Product A and 450 units of Product B each day at
an average price of $15 for Product A and $33 for Product B. The expected cost for Product A is
38% of its selling price and the expected cost for Product B is 57% of its selling price. Hygeia
Health has no beginning inventory, but it wants to have a six-day supply of ending inventory for
each product. Compute the budgeted cost of goods sold for the next (seven-day) week. (Round
the answer to the nearest dollar.)
a. $67,032
b. $66,519
c. $130,500
d. $77,60
ChatGPT
To compute the budgeted cost of goods sold (COGS) for Hygeia Health over a seven-day period, we will first calculate the expected cost for each product and then determine the total COGS for the week.
Daily Costs for Product A and Product B:
Product A:
Selling price: $15
Cost as a percentage of the selling price: 38%
Daily sales: 460 units
Cost per unit for Product A = $15 * 38% = $5.70
Daily cost for Product A = 460 units * $5.70 = $2,622
Product B:
Selling price: $33
Cost as a percentage of the selling price: 57%
Daily sales: 450 units
Cost per unit for Product B = $33 * 57% = $18.81
Daily cost for Product B = 450 units * $18.81 = $8,464.50
Weekly Costs for Product A and Product B:
Weekly cost for Product A = $2,622 * 7 days = $18,354
Weekly cost for Product B = $8,464.50 * 7 days = $59,251.50
Total Weekly Cost of Goods Sold:
Total COGS = Weekly cost for Product A + Weekly cost for Product B
Total COGS = $18,354 + $59,251.50 = $77,605.50
Rounding to the nearest dollar, the total budgeted COGS for the next week is approximately $77,606, which is close to option d. $77,60 (assuming a typo in the options and it should be $77,606).
Question 2:
XYZ Industries, a small manufacturing company, produces and sells widgets. XYZ Industries is
preparing its budget for the upcoming fiscal year. The following information is available for the
next year:
• Expected sales volume: 10,000 units
• Selling price per unit: $50
• Variable cost per unit: $30
• Fixed costs:
o Manufacturing overhead: $50,000
o Selling and administrative expenses: $20,000
• Expected income tax rate: 25%
Calculate the cash budget for the first quarter of the upcoming fiscal year, assuming XYZ
Industries collects 70% of its sales in the same month, pays 40% of its direct materials
purchases in the same month, and has a beginning cash balance of $10,000.
