Question 1)

Refer to the Karla Inc. information below. Karla Inc. manufactures tents under various brand names. The company sells most of its hammocks in the second quarter of each year. Their production budget for the second quarter shows the following number of hammocks needs to be produced: April 7000 units

May 15 000 units

June 25 000 units Each unit requires 25 feet of cotton rope cord which costs $0.60 per foot. The company has determined that it needs 20 per cent of next months raw material needs on hand at the end of each month. In addition, each hammock requires 55 minutes of direct labour for assembly and inspection at a cost of $0.45 per minute. The company currently applies manufacturing overhead to production at the rate of $9.50 per direct labour hour. The total cost of direct labour and manufacturing overhead for the month of May is:

a) $201 775 b) $501 875 c) $635 201 d) $501 775