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. Each handisaw sells for $36. Wesley expects the following unit sales:

Wesley’s ending finished goods inventory policy is 20 percent of the next month’s sales.
       Suppose each handisaw takes approximately .75 hours to manufacture, and Wesley pays an average labor wage of $26 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 25 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

Explanation / Answer

SALES BUDGET JAN FEB MARCH QUARTER APRIL MAY Budgeted Sales units 2,800 3,000 3,500 9,300 3,300 2,700 Selling price per unit 36 36 36 36 36 36 Total Sales 100,800 108,000 126,000 334,800 118,800 97,200 PRODUCTION BUDGET JAN FEB MARCH QUARTER APRIL Budgeted Sales Units 2,800 3,000 3,500 9,300 3,300 Add: Desired Ending Finished inventory 600 700 660 660 540 Total Needs 3,400 3,700 4,160 9,960 3,840 Less: Beginning Finished Inventory 560 600 700 560 660 Required Production in units 2,840 3,100 3,460 9,400 3,180 RAW MATERIAL PURCHASE BUDGET APRIL MAY JUNE QUARTER JULY Budgeted production units 2,840 3,100 3,460 9,400 3,180 Raw material required per unit 1 1 1 1 1 Total Production needs 2,840 3,100 3,460 9,400 3,180 Add: Desired Ending Inventory 775 865 795 795 Total needs 3,615 3,965 4,255 10,195 Less: Beginning Inventory 710 775 865 710 Purchase Units 2,905 3,190 3,390 9,485 Cost price per unit 7.00 4.00 4.00 4.00 Budgeted Purchase in $ 20,335 12,760 13,560 37,940 LABOUR COST BUDGETS JAN FEB MARCH QUARTER Units to be produced 2,840 3,100 3,460 9,400 Labour required per unit 0.75 0.75 0.75 0.75 Labour hours 2130 2325 2595 7050 Labuor Rate per hour 26 26 26 26 Budgeted Labour cost in $ 55,380 60,450 67,470 183,300 JAN FEB MARCH TOTAL Budgeted sales 100800 108000 126000 334800 Budgeted production units 2840 3100 3460 9400 Raw material purchase in $ 20335 12760 13560 37940 labour cost in $ 55380 60450 67470 183300

Related Questions

Navigate

• Browse (All)
• Browse W
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.