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Management has provided you with the following estimates for the coming year: Units expected to be sold: 50,000 Selling Price per unit: $100 Current Inventory
Management has provided you with the following estimates for the coming year:
Units expected to be sold: | 50,000 |
Selling Price per unit: | $100 |
Current Inventory of Units | 0 |
Number of extra Units I want to keep in stock | 8,000 |
Direct Materials Cost per unit | $3 |
Cost of Direct Materials on hand now | $4,000 |
Cost of extra Direct Materials I want to keep in stock | $6,000 |
Direct Labor Hours per unit | 4 hours |
Cost of Direct Labor per hour | $12/hour |
Variable Manufacturing Overhead per unit | $6/unit |
Budgeted Fixed Manufacturing Overhead | $500,000 (100,000 of this is Depreciation Expense) |
Fixed Selling & Administrative Expenses | $400,000 (100,000 of this is Depreciation Expense) |
Cash on Hand at Beginning of Year | $50,000 |
% of Sales Collected in Cash during the year | 80% |
% of Direct Materials Purchases Paid for during year | 75% |
Everything else paid for in cash |
Based on the above, they have asked you to answer the following questions:
A. How many units will I need to produce?
B. How much Direct Materials will I need to buy?
C. How much will I spend on Direct Labor?
D. How much will total Manufacturing Overhead be?
E. How much cash will the company have at the end of the year?
I was able to get A) 58,000 units, B) $176,000 in DM, and C) $2,784,000 for DL. However, I am confused on how to solve for D) and E).
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