Evaluate what are budgeted conversion costs for january

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Barrington Bears (BB) has developed the subsequent sales forecasts for the next few months: January 500, February 600, March 720, April 800, and May 770. BB has 80 bears on hand on Dec. 31. Normal ending inventory policy is to hold 20 percent of next month's sales. Each bear needs .8 yards of fabric and two pounds of stuffing. Fabric is budgeted to cost $15 per yard and stuffing $4 per pound. Direct labor is paid $9 per hour. Each bear takes 40 minutes to hand-finish. Variable overheads total $21 per direct labor hour. Fixed overheads amount to $25,000 per month. Eighty yards of fabric and 100 pounds of stuffing were in stock at year-end. Ten percent and 25 percent of next month's stuffing and fabric needs correspondingly are planned for raw materials ending inventory each month.

Evaluate what are budgeted conversion costs for January?

Reference no: EM1377499

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