Mercury Bag Company produces cases of grocery bags. The managers at Mercury are
ID: 2436857 • Letter: M
Question
Mercury Bag Company produces cases of grocery bags. The managers at Mercury are trying to develop budgets for the upcoming quarter. The following data have been gathered.
a. Using the above information, develop Mercury's sales forecast in dollars and production schedule in units.
b. What is Mercury's budgeted variable manufacturing cost per case?
c. Prepare Mercury's manufacturing cost budget.
d. What is the projected ending value of the Inventory account?
Projected sales in units 1,320 cases Selling price per case $ 240 Inventory at the beginning of the quarter 150 cases Target inventory at the end of the quarter 100 cases Direct labor hours needed to produce one case 2 hours Direct labor wages $ 10 per hour Direct materials cost per case $ 8 Variable manufacturing overhead cost per case $ 6 Fixed overhead costs for the upcoming quarter $ 220,000
Explanation / Answer
Req 1: Sales budget in $: Sales units projected 1320 Selling price per unit 240 Budgeted sales in $ 316800 Production Budget in Units: Salles unit 1320 Add: ending inventory 100 Less: Beginning inventory 150 Production units 1270 Req: Variable Mmanufacturing cost per case: Direct Material 8 Direct labouur 20 Variable Manufacturing OH 6 Variable Manufacturing OH 34 Req : Manufacturing Cost Budget: Material (1270*8) 10160 Labour (1270*20) 25400 Variable Manufacturing OH (1270*6) 7620 Fixed Manufacturing OH 220000 Manufacturing Cost Budget: 263180 Req: Total manufacturing cost 263180 Divide: Units produced 1270 Manufacturing Cost per unit 207.23 Ending Inventory units 100 Ending inventory value 20723