Hello, I am working on the assignment below, but I am unsure of how to solve it,

Question

Hello, I am working on the assignment below, but I am unsure of how to solve it, please help me in solving it.

1.1. Benet Company has budgeted the following unit sales:

The finished goods inventory on hand on December 31, 2015 was 21,000 units. It is the company's policy to maintain a finished goods inventory at the end of each quarter equal to 20% of the next quarter's anticipated sales.

Prepare a production budget for 2016.

2. Pulham Company is preparing its direct labor budget for 2016 from the following production budget based on a calendar year:

Each unit requires 2 hours of direct labor. The union contract provides for a 10% increase in wage rate to $11 per hour on October 1.

Prepare a direct labor budget for 2016.

PULHAM COMPANY
Direct Labor Budget
For the Year Ended December 31, 2016

First
Quarter

Second
Quarter

Third
Quarter

Fourth
Quarter

Total

2017 2016 Quarter Units Quarter Units 1 105,000 1 90,000 2 60,000 3 75,000 4 120,000

Explanation / Answer

1

2

PULHAM COMPANY

Direct Labor Budget

For the Year Ended December 31, 2016

Q1

Q2

Q3

Q4

Total

Units to be produced

60000

30000

45000

75000

210000

Direct labor time (hours) per unit

2

2

2

2

2

Total required direct labor

120000

60000

90000

150000

420000

cost per hour

10

10

10

11

Total direct labor cost

1200000

600000

900000

1650000

4350000

BENET COMPANY Production Budget For the Year Ended December 31, 2016 Quarter 1 2 3 4 Total Expected unit sales 105000 60000 75000 120000 360000 ADD Desired ending finished goods 12000 15000 24000 18000 18000 Total required units 117000 75000 99000 138000 378000 Less Beginning finished goods units 21000 12000 15000 24000 21000 Required production units 96000 63000 84000 114000 357000

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