Note: I need a step by step answer to the following problem to better understand
ID: 2553448 • Letter: N
Question
Note: I need a step by step answer to the following problem to better understand how this works.
Hot Coffee Manufacturing produces and sells oak tables. The budgeted manufacturing costs per table are as follows:
Direct costs
Oak top 48 square feet at $10 per sq. ft.
Table legs 4 legs at $5 per leg
Direct labor is 3 hours and 24 minutes per table at $15 per hour.
The variable overhead rate is $6 per direct labor hour and the fixed overhead rate is $8 per direct labor hour.
Inventories are expected to be as follows:
Beginning
Target Ending
Direct Materials
Oak tops
500
550
Table legs
240
200
Finished Goods
20 tables
30 tables
Budgeted Sales for May, Year 18 are expected to be 2,000 tables. Selling prices are budgeted to be $600 per table.
For May Year 18, prepare a
Sales Budget.
Production Budget in units
Direct materials budget in units and in dollars
Manufacturing Labor Budget
Overhead Budget
Refer to A above, the company expects to have beginning cash of $150,000 on May 1, Year 18. In addition to the above expenditures, the company is expected to have the following expenses the income statement:
Selling Expenses 24,000
Administrative Expenses 16,000
Depreciation 20,000
Prepare a cash budget for May Year 18
Beginning
Target Ending
Direct Materials
Oak tops
500
550
Table legs
240
200
Finished Goods
20 tables
30 tables
Explanation / Answer
Solution:
Part 1 – Sales Budget
Sales Budget for May
Budgeted Sales Units (tables)
2000
Selling Price per table
$600
Budgeted Sales Revenue (1200*600)
$1,200,000
Part 2 – Production Budget in Units
Production Budget
Expected Sales Units
2,000
Plus: Desired Ending Inventory
30
Total Units needed
2030
Less: Expected Beginning Inventory
20
Production Requirements
2010
Part 3 – Direct materials budget in unit and in dollars
Oak Tops
Table Legs
Total
Production requirements (number of tables)
2010
2010
Raw material required per table
48 feet
4 legs
Raw material required for production
96480
8040
Plus: Desired Ending Inventory
550
200
Total raw materials need
97030
8240
Less: Beginning Inventory
500
240
Raw material to be purchased
96530
8000
Cost per unit
$10.00
$5.00
Cost of purchases
$965,300
$40,000
$1,005,300
Part 4 – Manufacturing Labor Budget
Direct labor Cost budget
Units to be produced (from part 2)
2010
Required Direct Labor time per unit (3 hours and 24 minutes per table)
3.40
Total required direct labor time
6834
Direct labor rate per hour
$15
Total Direct labor cost
$102,510
Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you
Pls ask separate question for remaining parts.
Sales Budget for May
Budgeted Sales Units (tables)
2000
Selling Price per table
$600
Budgeted Sales Revenue (1200*600)
$1,200,000
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