Calaulator eBook Operating Budget, Comprehensive Analysis Allison Manufacturing
ID: 2594603 • Letter: C
Question
Calaulator eBook Operating Budget, Comprehensive Analysis Allison Manufacturing produces a subassembly used in the production of jet alrcraft engines. The assembly is sold to engine manufacturers and aircraft maintenance facilities. Projected sales in units for the coming 5 months follow January February March April 40,000 50,000 60,000 60,000 62,000 May The following data pertain to production policies and manufacturing speifications followed by Allison Manufacturing a. Finished goods inventory on January 1 is 32,000 units, each costing S 166.06. The desired ending inventory for each month is 80% of the next month's sales. b. The data on materials used are as follows: DM Unit Cost ($) Direct Material Metal Components Inventory policy dictates tat sumoert materials be on hand at the end of the month to produce so% orthe next months roduction meds. ms is exactly the amount of material on hand on December 31 of the prior year. Per-Unit Usage 10 lbs. c. The direct labor used per unit of output is 3 hours. The average direct labor cost per hour is $14.25 d. Overhead each month is estmated using a fiexible budget formula. (Nore: Activity is measured in direct labor hours.) Fixed-CostVariable-Cost Component ()Component ($) Previous Check My WorkExplanation / Answer
Required Budgets are as prepared below:
1. Sales Budget Alison manufacturing Sales Budget For the quarter ended March 31 Month Particulars January February March Total Sale Units (a) 40,000 50,000 60,000 150,000 *Price per unit (b) $205 $205 $205 $205 Total Sales $8,200,000 $10,250,000 $12,300,000 30,750,000 2. Production Budget Alison manufacturing Production Budget For the quarter ended March 31 Month Particulars January February March Total April Sale Units (a) 40,000 50,000 60,000 150,000 60000 Planned ending units (b) (80% of next month sales) 40,000 48,000 48,000 136,000 49,600 Beginning units (c ) 32,000 40,000 48,000 120,000 48,000 Planned production units (d)= (a+b-c) 48,000 58,000 60,000 166,000 61,600 3. Raw material Budget Alison manufacturing Raw Material Purchase Budget For the quarter ended March 31 Month Particulars January Metals January Components February Metals February Components March Metals March Components Total Metals Total Components Planned production units (a) 48,000 48,000 58,000 58,000 60,000 60,000 166,000 166,000 *Direct Material required per unit (b) 10.0 6.0 10.0 6.0 10.0 6.0 10.0 6.0 Direct Material Required for production (c ) 480,000 288,000 580,000 348,000 600,000 360,000 1,660,000 996,000 Budgeted ending Direct Material (d) (50% of next month prod needs) 290,000 174,000 300,000 180,000 308,000 184,800 308,000 184,800 Beginning Direct Material (e ) 240,000 144,000 290,000 174,000 300,000 180,000 240,000 144,000 Budgeted direct material purchase f= c+d-e 530,000 318,000 590,000 354,000 608,000 364,800 1,728,000 1,036,800 Cost per unit (g) $8 $5 $8 $5 $8 $5 $8 $5 BudgetedDM purchases $4,240,000 $1,590,000 $4,720,000 $1,770,000 $4,864,000 $1,824,000 $13,824,000 $5,184,000 4. Direct labour Budget Alison manufacturing Direct Labour Budget For the quarter ended March 31 Month Particulars January February March Total Planned production units (a) 48,000 58,000 60,000 166,000 *Direct labour required per unit (b) 3.0 3.0 3.0 3.0 Budgeted Direct labour hours 144,000 174,000 180,000 498,000 Cost per direct labour hour 14.25 14.25 14.25 14.25 Budgeted Direct labour Cost $2,052,000 $2,479,500 $2,565,000 $7,096,500