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Pearl Strand Company is planning to sell 400 buckets in October, 500 buckets in November, and 480 buckets in December. Pearl's company policy is to
Pearl Strand Company is planning to sell 400 buckets in October, 500 buckets in November, and 480 buckets in December. Pearl's company policy is to have 20% of next month's sales in ending finished goods inventory at end of any given month. At the beginning of October, Pearl was in compliance with the company policy. Each bucket requires 1/4 pound of plastic and 1/8 hour of direct labor. Plastic costs $16 per pound and employees of the company are paid $24 per hour. Factory overhead is applied at a rate of 200% of direct labor costs. Pearl keeps 10% of next month's production needs on hand (plastic) and has this many pounds on hand at the beginning of October. 1. To be in compliance with company policy, Pearl will purchase 117.4 pounds of plastic for October 2. Pearl will budget $1,260 for direct labor in October 3. Budgeted Finished Goods Inventory on October 31 will be $1,300. o Only Statement #1 is true o Only Statement #2 is true O Both Statements #2 and 83 are true All of the Statements are true Both Statements #1 and #2 are true 1. To be in compliance with company policy, Pearl will p October 2. Pearl will budget $1,260 for direct labor in October. 3. Budgeted Finished Goods Inventory on October 31 O Only Statement #1 is true O Only Statement #2 is true O Both Statements #2 and #3 are true O All of the Statements are true Both Statements #1 and #2 are true O All of the Statements are false O Only Statement #3 is true O Both Statements #1 and #3 are true
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