Boards 4 Boomers manufactures retro board games. The company is going through it
ID: 2499946 • Letter: B
Question
Boards 4 Boomers manufactures retro board games. The company is going through its annual budgeting process. Using the following data, determine the $ Amount that must be budgeted for Direct Materials, Direct Labor, and Factory Overhead. How much will Boards 4 Boomers spend to meet the Production Budget?
Projected Sales: 1,250,000 games
Inventory Buffer Required: 100,000
Finished Goods Inventory: 68,000
DM Inventory Buffer Required: 70,000 parts
DM Current Inventory: 65,000 parts
DM = 7 parts / game
DM$ = $2.25 / part
DL = 20 minutes per part
DL$ = $21.75 / hour
Factory Overhead is Allocated at $1.10 per game
Explanation / Answer
Projected Sales = 1,250,000 games
Inventory Buffer Required =100,000 games
Finished Goods Inventory =68,000 games
Budgeted Sales = Projected Sales + Inventory Buffer Required - Finished Goods Inventory
= 1,250,000 + 100,000 - 68,000
=12,82,000 games
Direct materials required for budgeted sales = 1282000 * 7
= 8974000 parts
Budgeted Direct material parts required = Direct materials required for budgeted sales + DM Inventory Buffer Required - DM Current Inventory
= 8974000 + 70,000 - 65,000
= 8979000 parts
$ Amount that must be budgeted for Direct Materials = Budgeted DM * rate per part
= 8979000 parts * $2.25 / part
= $20202750
Budgeted Direct Labour Hours required = Budgeted Direct material parts required * Hours required for each part
=8979000 parts * (20/60)
=2993000 Hours
$ Amount that must be budgeted for Direct Labour = Budgeted DL Hours* rate per Hour
= 2993000 Hours * $21.75 / hour
= $65097750
$ Amount that must be Budgeted for Factory overhead = Budgeted games * Factory OH rate per game
= 12,82,000 games * $1.10 per game
= $1410200