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 careless power handisaw. Use the following information about this product ine to complete the problem requirements. Each handisaw sells for S30. Wesley expects the following unit sales: Wesley's ervltng f n shed goods inventory policy is 2C percent of the next month's sales. Suppose each handisaw takes approximately.75 hours to manufacture, and Wesiey pays an average 'aPor wage of S20 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of SS.OQ each. The company has an ending raw materials inventory policy of 25 percent of the follow tng month's production requirements. Materials other than the housing unit total $4.50 per handisaw. Manufacturing overhead for this product includes S/2.000 annual fixec overhead (based on production of 27.000 units) and Si.20 per unit variable Manufacturing overhead. Wesiey's selling expenses are 7 percent of saes coi'ars. and administratve expenses are fixed at $18.000 per month. 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

Solution-

Wesley Power Sales Budget Month Detail Jan Feb Mar Sales Units               2,200                          2,400                          2,900 × Price per Unit               30.00                          30.00                          30.00 Total Sales      66,000.00                 72,000.00                 87,000.00 Production Budget Month Detail Jan Feb Mar Sale Units                                                     2,200                          2,400                          2,900 Planned ending units                (2400*0.2),(2900*0.2),(2700*0.2)                  480                             580                             540 Beginning units                         (2200*0.2),(2400*0.2),(2900*0.2)                  440                             480                             580 Planned production units          (Sales units+Planned endingunits -Beginning units)              2,240                         2,500                         2,860 Direct Material Purchases Budget Month Jan Feb Mar Planned Production Units                 2,240                          2,500                          2,860 Ending Direct Material                          (2500*0.25),(2860*0.25),(2580*0.25)(1680*0.25)                  625                             715                             645 Raw materials required          = (Planned Production Units+Ending direct material)              2,865                         3,215                         3,505 Beginning Direct Material                     (2240*0.25),(2500*0.25),(2860*0.25)(2580*0.25)                  560                             625                             715 Direct Material to Purchases =(Raw materials required-Beginning Material)               2,305                          2,590                          2,790 × Direct Material per Unit                        1                                 1                                 1 Budgeted Direct Material                 2,305                          2,590                          2,790 × Cost per Direct Material unit                 5.00                            5.00                            5.00 Budgeted Direct Material Cost      11,525.00                 12,950.00                 13,950.00 Direct Labor Cost Budget Month Detail Jan Feb Mar Finished Goods               2,240                          2,500                          2,860 Direct labour hour required per unit                 0.75                            0.75                            0.75 Total direct labor hours (Finished Goods*Direct labour hour required per unit)          1,680.00                     1,875.00                     2,145.00 Direct labor rate               20.00                          20.00                          20.00 Total direct labor cost(Total direct labor hours*Direct labor rate)        33,600.00                   37,500.00                   42,900.00

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