Question 1 Preparing a Direct Labor Budget Patrick Inc. makes industrial solvent

Question

Question 1

Preparing a Direct Labor Budget

Patrick Inc. makes industrial solvents. Planned production in units for the first three months of the coming year is:

Each drum of industrial solvent takes 0.3 direct labor hours. The average wage is $17.10 per hour.

Required:

Prepare a direct labor budget for the months of January, February, and March, as well as the total for the first quarter. Do not include a multiplication symbol as part of your answer.

$

Question 2

Preparing an Overhead Budget

Patrick Inc. makes industrial solvents. Budgeted direct labor hours for the first three months of the coming year are:

The variable overhead rate is $0.80 per direct labor hour. Fixed overhead is budgeted at $2,990 per month.

Required:

Prepare an overhead budget for the months of January, February, and March, as well as the total for the first quarter. Do not include a multiplication symbol as part of your answer. Round total variable overhead and total overhead to the nearest dollar.

Explanation / Answer

Patrick Inc Direct Labour Budget For the coming First Quarter January February March Total Direct Labor Budget Units to be produced 40000 50000 60000 150000 Direct Labor Hours Per unit 0.3 0.3 0.3 Total Direct Labor Hours 12000 15000 18000 45000 Wage Rate 17.1 17.1 17.1 Direct Labor Cost 205200 256500 307800 769500 Patrick Inc Overhead Budget For the coming First Quarter Overhead January February March Total Total Direct Labor Hours 13140 12300 15075 40515 Variable Overhead Rate 0.8 0.8 0.8 Total Variable Overhead 10512 9840 12060 32412 Fixed Overhhead 2990 2990 2990 8970 Total Overhead 13502 12830 15050 41382

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