Suppose Chef Kitchen manufactures cast iron skillets. One model is a 10-inch skillet that sells for $ 28. Chef Kitchen projects sales of 625 10-inch skillets per month. The production costs are $ 6 per skillet for direct materials, $ 3 per skillet for direct labor, and $ 5 per skillet for manufacturing overhead. Chef Kitchen has 60 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40 % of the next month's sales. Selling and administrative expenses for this product line are $ 1,000 per month.

Required:

1. How many 10-inch skillets should Chef Plus produce in July?

Question

Cassandra Christensen

Business

28 November, 16:46

Suppose Chef Kitchen manufactures cast iron skillets. One model is a 10-inch skillet that sells for $ 28. Chef Kitchen projects sales of 625 10-inch skillets per month. The production costs are $ 6 per skillet for direct materials, $ 3 per skillet for direct labor, and $ 5 per skillet for manufacturing overhead. Chef Kitchen has 60 10-inch skillets in inventory at the beginning of July but wants to have an ending inventory equal to 40 % of the next month's sales. Selling and administrative expenses for this product line are $ 1,000 per month.

Required:

1. How many 10-inch skillets should Chef Plus produce in July?

+5

Answers (1)

Know the Answer?

Kamryn Mccormick · Answer 1

production schedule for July = 815 10-inch skillets

Explanation:

price of 10-inch skillet $28

projected sales 625 units

costs:

direct materials $6 direct labor $3 manufacturing overhead $5 sales and administrative expenses $1,000

beginning inventory 60 units

ending inventory 40% of August sales

production during July = (projected sales - beginning inventory) + (40% x projected sales August) = (625 units - 60 units) + (40% x 625 units) = 565 units + 250 units = 815 10-inch skillets