QUESTION: Only Need \"F\" Answered: Please follow the template below. 39. Budget
ID: 2521500 • Letter: Q
Question
QUESTION:
Only Need "F" Answered: Please follow the template below.
39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Sports Bars Inc., produces energy bars and sells them by the case (1 unit = 1 case). Information to be used for the operating budget this coming year follows Average sales price for each case is estimated to be $25. Unit sales for this coming year, ending December 31, are expected to be as follows First quarter 80,00o Second quarter 84,000 Third quarter 88,000 Fourth quarter 97,000 Finished goods inventory is maintained at a level equal to 15 percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated to be 13,000 units. Each unit of product requires 5 pounds of direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is estimated to be 43,0oo pounds Each unit of product requires o.10 direct labor hours at a cost of $14 per hour Variable manufacturing overhead costs are - - Indirect materials Indirect labor Other $0.20 per unit $o.15 per unit $0.10 per unit Fixed manufacturing overhead costs per quarter are . Salaries $80,0o0 Other $70,000 Depreciation $55,625 Required a. Prepare b. Prepare a production budget using the format shown in Figure 9.4 c. Prepare a direct materials purchases budget using the format shown in Figure 9.5. d. Prepare a direct labor budget using the format shown in Figure 9.6 e. Prepare a manufacturing overhead budget using the format shown in Figure 9.7. Round to the nearest dollar f. As the production manager, what concerns, if any, do you have about production requirements for each of the four a sales budget using the format shown in Figure 9.3. quarters?Explanation / Answer
a SALES BUDGET First Second Third Fourth Quarter Quarter Quarter Quarter A Unit sales 80000 84000 88000 97000 B Sales Price $25 $25 $25 $25 C=A*B Sales Revenue $2,000,000 $2,100,000 $2,200,000 $2,425,000 b PRODUCTION BUDGET First Second Third Fourth Quarter Quarter Quarter Quarter A Unit sales 80000 84000 88000 97000 B Add:Ending Inventory 12600 13200 14550 13000 C=A+B Total Quantity required 92600 97200 102550 110000 D=0.15*A Less: Beginning Inventory 12000 12600 13200 14550 C-D Quantity of Production 80600 84600 89350 95450 c DIRECT MATERIALS PURCHASE BUDGET First Second Third Fourth Quarter Quarter Quarter Quarter A Quantity of Production 80600 84600 89350 95450 B=A*5 Direct material needed in pounds 403000 423000 446750 477250 C Add: Ending Inventory 42300 44675 47725 43000 D=B+C Total Quantity Required(Pounds) 445300 467675 494475 520250 E=0.1*B Less: Beginning Inventory 40300 42300 44675 47725 F=D-E Quantity needed to be purchased 405000 425375 449800 472525 G Purchase price per pound $3 $3 $3 $3 H=F*G Total Purchase Amount $1,215,000 $1,276,125 $1,349,400 $1,417,575 d DIRECT LABOR BUDGET First Second Third Fourth Quarter Quarter Quarter Quarter A Quantity of Production 80600 84600 89350 95450 B=0.1*A Direct Labor hour 8060 8460 8935 9545 C Direct Labor rate($/hour) $14 $14 $14 $14 D=B*C Direct Labor Cost $112,840 $118,440 $125,090 $133,630 e MANUFACTURING OVERHEAD BUDGET First Second Third Fourth Quarter Quarter Quarter Quarter A Quantity of Production 80600 84600 89350 95450 Variable Manufacturing Overhead: B=A*0.2 Indirect materials 16120 16920 17870 19090 C=A*0.15 Indirect labor 12090 12690 13402.5 14317.5 D=A*0.10 Others 8060 8460 8935 9545 E=B+C+D Total Vatiable overhead cost 36270 38070 40207.5 42952.5 Fixed manufacturing Overhead: F Salaries $80,000 $80,000 $80,000 $80,000 G Others $70,000 $70,000 $70,000 $70,000 H Depreciation $55,625 $55,625 $55,625 $55,625 I=F+G+H Total Fixed Overhead costs $205,625 $205,625 $205,625 $205,625 J=E+I Total Manufacturing overhead cost $241,895 $243,695 $245,833 $248,578 f The quantity of production is increasing in every quarter The quantity required in the fourt quarter is ((95450/80600)-1) 18% Higher than first quarter The concern of production manager will be availability of capacity and manpower for increased production