40) Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 4,000 units of Prime and 1,100 units of Luxuria in 2019.The following estimates are given for 2019:Prime LuxuriaSelling price$200$500Direct materials2050Direct labor70160Manufacturing overhead90100Nantucket had an inventory of 230 units of Prime and 125 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 360 units of Prime and 210 units of Luxuria.Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $15. There were 100 units of Crimpson in stock at the end of 2018.The management does not want to have any stock of Crimpson at the end of 2019.What is the amount budgeted for purchase of Crimpson in 2019? A) $61,950B) $16,275C) $17,775D) $16,500Answer: Explanation: Budgeted amount for purchase of Crimpson = [$15 × (1,185 units (Luxuria units produced) – 100 units (Units in hand)] = $16,275; Number of units of Luxuria to be produced = [1,100 units (Estimated sales) + 210 units (Budgeted ending inventory) – 125 units (Opening inventory)] = 1,185 units.

B

Diff: 3Objective: 3AACSB: Application of knowledge

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41) Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,500 units of Prime and 1,500 units of Luxuria in 2019.The following estimates are given for 2019:Prime LuxuriaSelling price$200$500Direct materials70100Direct labor60180Manufacturing overhead90150Nantucket had an inventory of 200 units of Prime and 105 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 400 units of Prime and 230 units of Luxuria.Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $12. There were 120 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019.What is the total budgeted cost of goods sold for Nantucket Industries in 2019?

B

Diff: 3Objective: 3AACSB: Application of knowledge

42) Nantucket Industries manufactures and sells two models of watches, Prime and Luxuria. It expects to sell 3,800 units of Prime and 1,300 units of Luxuria in 2019.The following estimates are given for 2019:Prime LuxuriaSelling price$200$500Direct materials6090Direct labor70150Manufacturing overhead40150Nantucket had an inventory of 240 units of Prime and 125 units of Luxuria at the end of 2018. It has decided that as a measure to counter stock outages it will maintain ending inventory of 350 units of Prime and 230 units of Luxuria.Each Luxuria watch requires one unit of Crimpson and has to be imported at a cost of $13. There were 140 units of Crimpson in stock at the end of 2018. The management does not want to have any stock of Crimpson at the end of 2019.What is the total budgeted cost of goods manufactured in 2019?