Question
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following information about this product line to complete the problem requirements. Each handisaw sells for $50. Wesley expects the following unit sales: |
January | 2,200 |
February | 2,500 |
March | 3,100 |
April | 2,800 |
May | 1,900 |
Wesleys ending finished goods inventory policy is 30 percent of the next months sales. |
Suppose each handisaw takes approximately .55 hours to manufacture, and Wesley pays an average labor wage of $15.50 per hour. |
Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory policy of 10 percent of the following months production requirements. Materials other than the housing unit total $4.00 per handisaw. |
Manufacturing overhead for this product includes $69,000 annual fixed overhead (based on production of 24,000 units) and $.80 per unit variable manufacturing overhead. Wesleys selling expenses are 6 percent of sales dollars, and administrative expenses are fixed at $15,000 per month.
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