Wesley Power Tools manufactures a wide variety of tools and accessories. One of
ID: 2447889 • Letter: W
Question
Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following information about this product line to complete the problem requirements. Each handisaw sells for $56. Wesley expects the following unit sales: January 4,800 February 5,000 March 5,500 April 5,300 May 4,700 Wesley’s ending finished goods inventory policy is 30 percent of the next month’s sales. Suppose each handisaw takes approximately .60 hours to manufacture, and Wesley pays an average labor wage of $18 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory policy of 20 percent of the following month’s production requirements. Materials other than the housing unit total $4.50 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. Wesley’s selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month.
Compute the following for the first quarter:
Jan Feb March
Budgeted Sales Revenue
Budgeted Production in Units
Budgeted Cost of Raw Materials
Budgeted Direct Labor Cost
Compute the following for the first quarter:
Jan Feb March
Budgeted Sales Revenue
Budgeted Production in Units
Budgeted Cost of Raw Materials
Budgeted Direct Labor Cost
Explanation / Answer
Details Amt $ Direct Material /unit(6+4.5) 10.50 Direc Labor =0.60*18 10.80 Var Mfg Oh /unit 1.20 Fixed Mfg OH /Unit= 63000/27000 72,000.00 Cost of prod /unit Month Jan Feb Mar Total For Quarter Apr May Sales units 4,800 5,000 5,500 15,300 5,300 4,700 ans 1 Budgeted Sales revenue @$56 /unit 268,800 280,000 308,000 856,800 Reqd Closing FG Inventory Units 1,500.0 1,650.0 1,590.0 1,410.0 Ans 2 Budgeted Production in month 6,300.0 5,150.0 5,440 16,890 5,120 Reqd Closing raw material units 1,030.0 1,088.0 1,024.0 - Raw Material cost @10.5 for Production 66,150 54,075 57,120 177,345 51,200 Raw Materials cost for closing inventory 10,815 11,424 10,752 32,991 - Ans 3 Budgeted Total Raw Materials Cost 76,965 65,499 67,872 210,336 Direct Labor Hrs @0.60 per unit 3,780 3,090 3,264 10,134 Ans 4 BudgetedDitect Labor cost @$18/hr 68,040 55,620 58,752 182,412
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