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1. Explain how is the relevance of a cost to a particular decision determined? 2. Portland company is preparing its budgets for the third quarter.

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1. Explain how is the relevance of a cost to a particular decision determined? 2. Portland company is preparing its budgets for the third quarter. The company plans to sell 80,000 units of its popular product. There are 7,000 units of the product in the inventory at the beginning of the quarter and the inventory is to be increased 15% during the quarter. Three units of Material A, each costing 50 cents, are required for each unit of product. There are 10,000 units of Material A in inventory and plans for the quarter indicate that Material A's inventory will increase by 20%. Each unit of product can be produced in 30 minutes of direct labor time. Direct labor is paid at the rate of $15.00 an hour. The variable manufacturing overhead varies at the rate of $3.40 per direct labor hour and the fixed manufacturing overhead for the quarter is estimated at $250,000. a. Prepare a production budget for the quarter. b. Prepare a material purchases budget for the quarter. c. Prepare a budget for direct labor. d. Prepare a budget for manufacturing overhead

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