Craft power tols manufactures a wide variety of accessories. one of it more popu
ID: 2568637 • Letter: C
Question
Craft power tols manufactures a wide variety of accessories. one of it more popular items is a cordless power handisaw. Each handisaw sells for $68. Craft expects the following unit sales.
Jan 6000
Feb 6200
March 6700
April 6500
May 5900
Caft ending finished goods inventory policy in .30 percent of the next months sales.
Suppose each handisaw takes approx .60 hours to manufacture and craft pays an average labor wage of 30$ per hour each handisaw requires a plastic housing that craft purchases from a supplier at a cost of 7$ each. The company has an ending raw Materials inventory policy of 20 percent of the following months production requirents. Materials other than the housing unit total 4.5$ per handisaw.
Manufacturing overhead for this product includes 72,000 annual fixed overhead (based on production of 27,000 units) and 1.20$ per unit variable manufacturing overhead. Craft selling experience are 7% of sales dollars, and administrative expenses are fixed at 18,000$ per month.
" Compute the following for the first quarter"
Budgeted sales rev January? Febuary? MArch? 1st quarter?
Budgeted production in units ? ? ? ?
Budgeted cost Raw Materials purchasesfor plastic housing ? ? ? ?
Budgeted direct labor Cost ? ? ? ?
Explanation / Answer
Sales revenue = Sales in units * Selling price per unit
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Ending finished goods inventory = 30 percent of the next months sales
(It is assumed that 30% of the january sales were produced in December)
Production in units = Sales in units this month + 30% of next month sales in units - 30% of the this month sales in units
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Each handisaw requires a plastic housing that craft purchases from a supplier at a cost of 7$ each.
Ending raw Materials inventory = 20 percent of the following months production requirents
(It is assumed that ending raw materials inventory of december consists of 20% of the January production needs)
Raw Materials purchases = Raw materail needs for the month + 20% of the next month needs of raw material - 20% of this month needs of raw material
(*) Budgeted cost Raw Materials purchases for plastic housing = Units of raw material * cost per unit
January = [6,060+(6,350*20%)-(6,060*20%] * 7 = 42,826
February = [6,350+(6,640*20%)-(6,350*20%)] * 7 = 44,856
March = [6,640+(6,320*20%)-(6,640*20%)] * 7 = 46,032
Production in April = 6500+(5,900*30%)-(6,500*30%) = 6,320
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Budgeted direct labor Cost = 0.60 hours to manufacture and craft pays an average labor wage of 30$ per hour.
408,000
(6,000*68)
421,600
(6,200*68)
455,600
(6,700*68)
6,060
[6000+(6,200*30%)-(6,000*30%)]
6,350
[6,200+(6,700*30%)-(6,200*30%)]
6,640
[6,700+(6,500*30%)-(6,700*30%)]
109,080
(6060*0.6*30)
114,300
(6,350*0.6*30)
119,520
(6,640*0.6*30)
January February March 1st quarter Budgeted sales revenue408,000
(6,000*68)
421,600
(6,200*68)
455,600
(6,700*68)
1,285,200 Budgeted production in units6,060
[6000+(6,200*30%)-(6,000*30%)]
6,350
[6,200+(6,700*30%)-(6,200*30%)]
6,640
[6,700+(6,500*30%)-(6,700*30%)]
19,050 Budgeted cost Raw Materials purchases for plastic housing (*) 42,826 44,856 46,032 133,714 Budgeted direct labor Cost109,080
(6060*0.6*30)
114,300
(6,350*0.6*30)
119,520
(6,640*0.6*30)
342,900