Required: Prepare the below budgets for Seuss Ltf, For October, 2018 both in fol

Question

Required:

Prepare the below budgets for Seuss Ltf, For October, 2018 both in follars and units (where applicable)

Seuss Ltd manufactures and sells two products: ThingOne and ThingTwo. With the recent downturn in the market, Seuss experienced a decline in financial performance. The management team is in the process of preparing the 2018 budget and put together the following budgeted information Annual sales are expected to be 5,000 units. Budgeted sales for the month of October and November 2018 are provided below (Table 1). All sales are on credit. Seuss Ltd expects to collect 40 percent of accounts receivable in the month of sale, 59% are collected the following month and 1% are never collected and are written off as bad debts. Seuss Ltd recorded sale revenue of $74,100 for ThingOne and $105,000 for ThingTwo during the month of September 2018 Table 1: Expected Sales in Units and Dollars for October and November 2018 Units Price Units Price 250 $280 160 $635 November 260 $270 200 $650 October The annual production is expected to be 5,100 units. Table 2 identifies the material requirements per unit of output and material costs per kg. These costs are not expected to change during the budgeted period Table 2: Budgeted Direct Materials- Inputs and Costs as at October 1, 2018 Cost Direct Material Required (in Kgs) per Unit per Kg Material X$5.50 Material Y $13.00 Material Z $7.50 hingOne 2.5 kg 3 kg 1.5 kg ThingTwo 5 k 3 k Beginning inventories of the respective direct materials are shown in Table 3. It is Seuss's policy to maintain an ending inventory equal to 20 percent of the current month's production Table 3: Direct Materials Inventory-as at October 1, 2018 Material X MaterialY Material Z ThingOne Kgs 125 300 220 Cost $625 $3,750 $1,584 ThingTwo (Kgs) 180 350 215 Cost 900 $4,935 $2,580

Explanation / Answer

3...Production Budget Thing One Thing Two Oct. 2018 Nov.2018 Oct. 2018 Nov.2018 Sales units 250 260 160 200 Ending Finished goods inventory 63 65 40 50 Total units needed 313 325 200 250 Less: Beginning Inventory 45 63 32 40 Production reqd. 268 263 168 210 Purchases of Raw Materials Budget Material X Production units(From above) 268 263 168 210 Reqd./unit(in Kg.) 2.5 2.5 5.0 5.0 Total reqd. for current mth.prodn. 668.8 656.3 840.0 1050.0 Ending inventory reqd.(20%) 134 131 168 210 Total kgs.needed 803 788 1008 1260 Less: Beginning Inventory 125 134 180 168 Purchases reqd.(Kg.) 678 654 828 1092 Cost/Kg. 5.5 5.5 5.5 5.5 Total $ purchases 3726.25 3595.63 4554 6006.00 Material Y Production units(From above) 268 263 168 210 Reqd./unit(in Kg.) 3.0 3.0 4.0 4.0 Total reqd. for current mth.prodn. 802.5 787.5 672.0 840.0 Ending inventory reqd.(20%) 161 158 134 168 Total kgs.needed 963 945 806 1008 Less: Beginning Inventory 300 161 350 134 Purchases reqd.(Kg.) 663 785 456 874 Cost/Kg. 13 13 13 13 Total $ purchases 8619 10198.50 5933.2 11356.80 Material Z Production units(From above) 268 263 168 210 Reqd./unit(in Kg.) 1.5 1.5 3.0 3.0 Total reqd. for current mth.prodn. 401.3 393.8 504.0 630.0 Ending inventory reqd.(20%) 80 79 101 126 Total kgs.needed 482 473 605 756 Less: Beginning Inventory 220 80 215 101 Purchases reqd.(Kg.) 262 392 390 655 Cost/Kg. 7.5 7.5 7.5 7.5 Total $ purchases 1961.25 2941.88 2923.5 4914.00 Raw Material Usage(FIFO): Total reqd. for current mth.prodn. Material X Beg.Inv. 125 180 Current purchases 543.75 656.3 660 1050.0 Total 668.75 656.25 840 1050 Material Y Beg.Inv. 300 350 Current purchases 502.5 787.5 322 840.0 Total 802.5 787.5 672.0 840.0 Material Z Beg.Inv. 220 215 Current purchases 181.25 393.8 289 13.0 Total 401.3 393.8 504.0 630.0 Purchase $ Material X 3726.25 3595.625 4554 6006 Material Y 8619 10198.5 5933.2 11356.8 Material Z 1961.25 2941.875 2923.5 4914 Total $ purchases 14306.5 16736 13410.7 22276.8 4….Direct Mfg. Labor Budget Thing One Thing Two Total Production reqd. 268 263 168 210 Assembly : Reqd. Labor hrs./unit 2 2 2.5 2.5 Total D/L hrs. at Assembly 535 525 420 525 2005 Cost /hr.($) 30 30 30 30 30 Total D/L cost at Assembly 16050 15750 12600 15750 60150 Packaging: Reqd. Labor hrs./unit 0.3 0.3 0.5 0.5 Total D/L hrs. at Packaging 80.25 78.75 84 105 348 Cost /hr.($) 22 22 22 22 22 Total D/L cost at Packaging 1765.5 1732.5 1848 2310 7656 Total D/L Cost 17815.5 17482.5 14448 18060 67806 5....Manufacturing OH Budget Thing One Thing Two Total Oct. 2018 Nov.2018 Oct. 2018 Nov.2018 Production reqd. 268 263 168 210 Set-up costs : No.of units/batch 15 15 12 12 So,Total No.of batches 17.83 17.5 14 17.5 Set-up time/batch(in hrs.) 1.5 1.5 2 2 Total set-up time in hrs. 26.75 26.25 28 35 116 Cost per set-up hr. 120 120 120 120 120 Total set-up costs 3210 3150 3360 4200 13920 Processing costs: Machine hr. reqd./unit 4 4 6 6 Total M/c.hrs.reqd. 1070 1050 1008 1260 4388 Cost per M/c hr. 8 8 8 8 8 Total processing costs 8560 8400 8064 10080 35104 Inspection costs: No.of units/batch 15 15 12 12 So,Total No.of batches 17.83 17.50 14.00 17.50 Inspection time/batch(in hrs.) 5 5 6 6 Total Inspection time in hrs. 89.17 87.50 84.00 105.00 365.67 Cost per Inspection hr. 21 21 21 21 21 Total set-up costs 1872.5 1837.5 1764 2205 7679 Total Mfg. OH costs 13642.5 13387.5 13188 16485 56703

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