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Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more...

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Accounting

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $48. Wesley expects the following unit sales:

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Wesleys ending finished goods inventory policy is 20 percent of the next months sales. Suppose each handisaw takes approximately .75 hours to manufacture, and Wesley pays an average labor wage of $24 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 25 percent of the following months production requirements. Materials other than the housing unit total $4.50 per handisaw. Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesleys selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month.

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January February March April May 4,000 4,200 4,700 4,500 3,900

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