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w Student Home-GowMU × ? w Homepage-Elearning-West: × y D HW Ch B YOSEF ? ezto.mheducation.com/hm.tpx HW Ch 8 Question 4 (of 4) Save & ESubmit Time remaining: 2:4233 4.00 points PA8-4 Preparing Operating Budget Components [LO 8-3a, b, c, d] 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 $32. Wesley expects the following unit sales: January February March April May 2400 2,800 3.100 2 800 2,300 Wesley's ending finished goods inventory policy is 30 percent of the next month's sales Suppose each handisaw takes approximately.60 hours to manufacture, and Wesley pays an average labor wage of $22 per hour Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory policy of 20 percent of the following month's production requirements. Materials other than the housing unit total $4.50 per handisaw. administrative expenses are fixed at $18,000 per month. Required: 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 percant of sales dollars, and 1. Compute the following for the first quarler: (Do not round your intermediate calculations.) January February March 1st Quarter total 1. Budgeted Sales Revenue 2. Budgeted Production in Units 3. Budgeted Cost of Raw Material Purchases for the Plastic Housings 4. Budgeted Direct Labor Cost References eBook & Resources Worksheet Leaming Objective: 08-03a Prepare the following components of the operating budget: Sales budget. budget Learning Objective: 08-03d Prepare the following components of the operating budget: Direct laborExplanation / Answer
Answer:
Jan
Feb
March
1st Quarter Total
Budget sales Revenue
76,800
83,200
99,200
259,200
Budget Production in units
2,460
2,750
3,040
8,250
Budget Cost of raw material purchases for the plastic houdings
26,439
29,484
31,248
87,171
Budget direct labor costs
32,472.00
36,300.00
40,128.00
108,900.00
Working notes for the above answer
1
Particulars
January
February
March
Quarter
Units of Sales
2,400
2,600
3,100
8,100
Selling Price Per Unit
32
32
32
32
Total Budgeted Sales
76,800
83,200
99,200
259,200
2
Particulars
January
February
March
Quarter
Units Required to meet sales Budget
2,400
2,600
3,100
8,100
Add Desired Ending Inventory
780
930
870
2,580
Total Units required
3,180
3,530
3,970
10,680
Less beginning Inventory
(720)
(780)
(930)
(2,430)
Production required
2,460
2,750
3,040
8,250
3
Raw Material Budget
Particulars
January
February
March
Quarter
Production required
2,460
2,750
3,040
8,250
Add Desired Ending Inventory
550.00
608.00
544.00
1,702.00
Total Raw material available
3,010.00
3,358.00
3,584.00
9,952.00
Less beginning Inventory
(492.00)
(550.00)
(608.00)
(1,650.00)
raw material Purchased
2,518.00
2,808.00
2,976.00
8,302.00
Cost Per handishaw
10.50
10.50
10.50
10.50
Cost of Raw material budgeted
26,439.00
29,484.00
31,248.00
87,171.00
4)Direct Labor Budget
Particulars
January
February
March
Quarter
Production required
2,460
2,750
3,040
8,250
Direct labor required (Hours)
0.60
0.60
0.60
0.60
Total Hours required
1,476.00
1,650.00
1,824.00
4,950.00
Direct labor cost per hour
22
22
22
22
Total labor cost
32,472.00
36,300.00
40,128.00
108,900.00
Jan
Feb
March
1st Quarter Total
Budget sales Revenue
76,800
83,200
99,200
259,200
Budget Production in units
2,460
2,750
3,040
8,250
Budget Cost of raw material purchases for the plastic houdings
26,439
29,484
31,248
87,171
Budget direct labor costs
32,472.00
36,300.00
40,128.00
108,900.00
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