1) Create a Direct Materials Budget and Direct Labor Budget using the following
ID: 2517777 • Letter: 1
Question
1) Create a Direct Materials Budget and Direct Labor Budget using the following narrative and information (40pts):
Company produces Tables. One Table is made of one material, Wood, and it takes 10 sq ft of Wood to make each Table. The Wood can be purchased for $0.50 per sq ft. Only one labor activity is required to produce each Table, and it takes 3/4 an hour to produce each Table. Laborers are paid $15 per hour.
Projected Table Sales: 200,000 units
Estimated Beginning Table Inventory: 50,000 units
Estimated Beginning Wood Inventory: 25,000 sq ft
Desired Ending Table Inventory: 100,000 units
Desired Ending Wood Inventory: 35,000 sq ft
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Explanation / Answer
Dear Student Thank you for using Chegg Please find below the answer Direct Material Budget Paticulars Amount Sales 200,000.00 Desired Ending Table Inventory 100,000.00 Total Units available 300,000.00 Less Estimated Beginning Table Inventory (50,000.00) Units to be produced 250,000.00 Feet required per unit 10.00 Total Feet required for production=250000*10 2,500,000.00 Add Desired Ending Wood Inventory 35,000.00 Total Feet to be available 2,535,000.00 Less Estimated Beginning Wood Inventory (25,000.00) Sq Feet to be purchased 2,510,000.00 Cost per sq feet 0.50 Direct Materials Purchase cost = 2510,000*.50 1,255,000.00 Direct Labour budget' Particulars Amount Units to be produced 250,000.00 Hour per unit 0.75 Total hours required = 250000 * .75 187,500.00 Labour cost per hour 15.00 Total Labour cost 2,812,500.00
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