Flamingo Company makes bobbin cases The budgeted material co

Flamingo Company makes bobbin cases. The budgeted material cost of each unit is $0.3. The budgeted direct labor hours per unit is 0.02 hours and wage rate is $15 per direct labor hour. The budgeted variable overhead per unit is $0.45 and fixed overhead for the year is $1,395,000. During the year, 15,500,000 units were expected to be produced and 150,000 units were budgeted for ending finished goods inventory. Calculate the total ending inventory cost. a. $192,000 b. $185,000 c. $168,000 d. $171,000

Solution

Material Cost per unit= $ 0.3

Labour Hours per unit=0.02 hrs

Wage Rate =$ 15 per hour

=$0.3

Variable Overhead per Unit= $0.45

Fixed Overhead=$ 1395000

Final Good produced = 15,500,000 Unit

Fixed Cost Per Unit= 1395000/15500000 =$0.09

Cost Of Inventory= 0.30+0.30+0.45+0.09      

= $ 1.14

Therefore answer is (d) Inventory Cost= 150000*1.14

=171000