Wesley Power Tools manufactures a wide variety of tools and accessories. One of

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 $44. Wesley expects the following unit sales: January 3,600 February 3,800 March 4,300 April 4,100 May 3,500 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 $20 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 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. Required: 1. Compute the following for the first quarter: (Round your intermediate calculations for Direct Labor Budget to 2 decimal places and other intermediate calculations to nearest whole dollar.)

Explanation / Answer

Jan Feb March Total budgeted sales revenue 158400 167200 189200 514800 43 budgeted production in units 3600 3800 4300 11700 budgeted cost of purchase 83314 budgeted direct labor cost 142200 budget units in production Jan feb Mar April May Total Units expected sales unit 3600 3800 4300 4100 3500 ending inventory 1140 1290 1230 1050 opening inventory 1080 1140 1290 1290 3660 3950 4240 3860 11850 budgeted cost of raw material Jan feb Mar April May total units in production 3660 3950 4240 3860 ending inventory in units 790 848 772 opening inventory in units 720 790 848 3730 4008 4164 11902 83314 Jan feb Mar April May total budgeted direct labor cost 43920 47400 50880 142200

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