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LouAnne's Widgets has the following sales and production for the next quarter: February March Sales January 4,000 units 4,900 units 7,000 units 9,000 units Production
LouAnne's Widgets has the following sales and production for the next quarter: February March Sales January 4,000 units 4,900 units 7,000 units 9,000 units Production 7,600 units 9,300 units Company policy is at the end of any given month, LouAnne should have 30% of the following month's sales on hand in ending inventory. LouAnne strictly adheres to this policy. Each widget requires 2 pounds of gelco compound. To prevent shortages, the LouAnne would like the inventory of gelco compound on hand at the end of each month to equal 10% of the following month's production needs. LouAnne strictly adheres to this policy. The inventory on January 1 is 980 pounds. The cost per pound of gelco compound is $12. Each unit requires 1.2 DLH to manufacture and each DLH is paid $20. Labor is paid in the month incurred. FOH is applied based on DLH. Estimated variable FOH for the year is expected to be $900,000 and estimated DLH for the year are expected to be 100,000. Fixed FOH is estimated to be $53,200 per month with $5,000 of that amount being depreciation of factory equipment and building. On February's balance sheet what amount will LouAnne show as Raw Materials Inventory
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