Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requir

Question

Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $4 per pound and 0.4 direct labor hours at a rate of $11 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $4,200 per month. The company’s policy is to maintain direct materials inventory equal to 30% of the next month’s materials requirement. At the end of March the company had 5,380 pounds of direct materials in inventory. The company’s production budget reports the following. Production Budget March April May Units to be produced 3,600 5,200 5,100 (1) Prepare direct materials budgets for March and April. Prepare direct labor budgets for March and April Prepare factory overhead budgets for March and April.

Explanation / Answer

Material Budget March April May Units Produced 3600 5200 5100 material required for each sculpture in pound 8 8 8 Material need to ptoduction         28,800            41,600         40,800 Material need for nex month production         12,480            12,240 Total material requirement         41,280            53,840 Less: Opening balance 5380            12,480 Material need to purchase         35,900            41,360 Cost per pound in $ 4 4 Total amount of purchase in $       143,600          165,440 Labor Budget Units Produced 3600 5200 Direct labor hour for each sculpture 0.4 0.4 Labor hour need to ptoduction           1,440              2,080 rate per labor hour in $ 11 11 Total budgeted labor cost $         15,840            22,880 Factory overhead budget Units Produced 3600 5200 Direct labor hour for each sculpture 0.4 0.4 Labor hour need to ptoduction           1,440              2,080 factory overhead per direct labor hour in $ 3 3 Total Factory budgeted Cost in $           4,320              6,240

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