Question

Suppose Iron Handles manufactures cast iron skillets. One model is a​ 10-inch skillet that sells for $ 30. Iron Handles projects sales of 625 ​10-inch skillets per month. The production costs are $ 8 per skillet for direct​ materials, $ 2 per skillet for direct​ labor, and $ 5 per skillet for manufacturing overhead. Iron Handles has 45 ​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 400 per month. Iron Handles is budgeted to produce 768 skillets in July. Compute the total amount budgeted for product costs for July.

Answer 1

The total amount budgeted for product costs for July is $10,875.

Step-by-step explanation:

Consider the following formula to calculate the total amount budgeted.

Budgeted gross profit = Budgeted sales-budgeted cost of goods sold

= 725*$30 - $10,875 = $10,875.