Choo-Foo Company makes and sells artistic frames for pictures. The controller is
ID: 2390297 • Letter: C
Question
Choo-Foo Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2011.
January February March April May
Estimated unit sales 12,000 16,000 6,000 9,000 10,000
Sales price per unit $49.65 $47.23 $47.23 $47.23 $47.23
Direct labor hours per unit 1.7 1.7 1.1 1.1 1.1
Wage per direct labor hour $7.80 $7.80 $7.80 $9.80 $9.80
Choo-Foo has a labor contract that calls for a wage increase to $9.80 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1.
Choo-Foo expects to begin the year with 20,000 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 50% of the second following month's sales.
QUESTION 1:
Instructions
Prepare a production budget and a direct labor budget for Choo-Foo Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours. (Round hours per unit and rate per hour to 2 decimal places, e.g. 10.50. Enter all amounts as positive amounts and subtract where necessary.)
CHOO-FOO COMPANY
Production Budget
For the Quarter Ending March 31, 2011
Jan Feb March Total
_______________ ___________ ___________ ___________ ___________
Plus:
_______________ ___________ ___________ ___________ ___________
_______________ ___________ ___________ ___________ ___________
Less:
_______________ ___________ ___________ ___________ ___________
Production needed ___________ ___________ ___________ ___________
QUESTION 2:
CHOO-FOO COMPANY
Direct Labor Budget
For the Quarter Ending March 31, 2011
Jan Feb March Total
_______________ ___________ ___________ ___________
_______________ x ___________ x ___________ x ___________
_______________ ___________ ___________ ___________
_______________ x $ __________ x $ __________ x $ __________
Total Direct Labor $ ___________ $ ___________ $ ___________ $ ___________
Explanation / Answer
production budget
jan
feb
march
total
budgeted sales
12000
16000
6000
34000
plus ending FG inv
19000
10500
14000
14000
31000
26500
20000
48000
less beginning FG inv
20000
19000
10500
20000
production needed
11000
7500
9500
28000
dl budget
jan
feb
march
total
production needed
11000
7500
9500
hours per unit
1.70
1.70
1.10
18700
12750
10450
rate per hour
7.80
7.80
7.80
total DL
145860
99450
81510
326820
production budget
jan
feb
march
total
budgeted sales
12000
16000
6000
34000
plus ending FG inv
19000
10500
14000
14000
31000
26500
20000
48000
less beginning FG inv
20000
19000
10500
20000
production needed
11000
7500
9500
28000
dl budget
jan
feb
march
total
production needed
11000
7500
9500
hours per unit
1.70
1.70
1.10
18700
12750
10450
rate per hour
7.80
7.80
7.80
total DL
145860
99450
81510
326820
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