Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Torgan Inc. produces three different types of chairs: an outdoor chair, an office chair, and a kitchen chair. The outdoor chairs are made entirely of

image text in transcribed
image text in transcribed
image text in transcribed
image text in transcribed
Torgan Inc. produces three different types of chairs: an outdoor chair, an office chair, and a kitchen chair. The outdoor chairs are made entirely of plastic. The office chairs have a plastic base and are covered in leather. The kitchen chairs are made out of wood with a leather seat. As the controller, you are expected to prepare Torgan's operating budget for January of 2019. Here is Torgan's balance sheet as of 12/31/2018: Cash Accounts Receivable DM Inventory FG Inventory Land Buildings and Equipment Accumulated Depreciation Total Assets $ 21,800 9,000 3,475 326,325 8,000 70.000 $ 419.400 Accounts Payable Capital Stock Retained Earnings Total Liablities and Stockholders Equity S 2.580 7,500 399,320 $ 419,400 You have gathered the following information about expected activity in 2019 1. The marketing department projects the following sales levels for each product in the first quarter of 2019 Outdoor Chairs Office Chairs Kitchen Chairs January 2019 2,600 February 2019 March 2019 2,900 4,800 5,800 7,800 The Ouldoor Chairs are expected to sell for $250 each, the Office Chairs are expected to sell for $600 each, and the Kitchen Chairs are expected o sell for $775 each 2. For each product, Torgan plans to have ending rished goods inventory in units) for each month that equals 35% of the next months sales (in unts). Finished Goods inventory on 12/3 1/2018 consists of 140 Ouldoor Chairs at a cost of $180 per unit, 235 Office Chairs at a cost of $550 per unit, and 275 Kitchen Chairs at a cost of s625 per unit. Torgan uses FiFO to account for its finished goods inventory 3. Torgan uses plastic, leather, and wood to make its chairs. Each Outdoor Chair requires 25 pounds of plastic. Each Office Chair requires 15 pounds of plasic and 21 square feet of leather. Each Kitchen Chair requires 9 square feet of leather and 42 board feet of wood. The company expects to pay $2.25 per pound of plastic, $14.96 per square foot of leather, and 58 per board foot of wood 4Direct Materials (DM) inventory on 12/31/2018 consists of 1000 pounds of plastic at a cost of $1.75 per pound, 500 square feet of leather at a cost of $15per square foot, and 650 board feet of wood at a cost of $6.5 per board foot. At the end of each month Torgan plans to keep 20 % of the plastic, leather, and wood required for the next months production in DM inventory, Torgan uses FIFO to account for its DM inventory 5. Each Outdoor Char requires 2 hours of direct labor each mce Chair requires 4.5 hours of direct labor, and each kitchen Chair requires 6 hours of direct labor. The direct labor rate is expected to be $13 per hour

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Intermediate Accounting Volume 2

Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy

13th Canadian Edition

1119740444, 9781119740445

More Books

Students also viewed these Accounting questions

Question

How are most students funded?

Answered: 1 week ago

Question

b. Did you suppress any of your anger? Explain.

Answered: 1 week ago