Wesley Power Tools manufactures a wide variety of tools and accessories. One of
ID: 2564391 • Letter: W
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 $52. Wesley expects the following unit sales: 4.400 4.600 5.100 4.900 4,300 January March April May Wesley's ending finished goods inventory policy is 25 percent of the next month's sales. Suppose each handisaw takes approximately .60 hours to manufacture, and Wesley pays an average labor wage of $28 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 20 percent of the following month's production requirements. Materials other than the housing unit total S4.50 per handisaw percent of sales dollars, and 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 1. Compute the following for the first quarter: (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 CostExplanation / Answer
Answer:
January
February
March
Quarter
Budgeted Sales revenue
228,800
239,200
265,200
733,200
Budgeted Production in units
4,450
4,725
5,050
14,225
Budgeted Cost of RM purchase
74,760
79,380
84,840
238,980
Budgeted Direct labour cost
29,978
31,876
34,825
96,679
Working notes for the above answer is as under
1
Sales budget
1) Sales Budget
Particulars
January
February
March
Quarter
Units of Sales
4,400
4,600
5,100
14,100
Selling Price Per Unit
52
52
52
52
Total Budgeted Sales
228,800
239,200
265,200
733,200
2
2)Production Budget
Particulars
January
February
March
Quarter
Units Required to meet sales Budget
4,400
4,600
5,100
14,100
Add Desired Ending Inventory
1,150
1,275
1,225
3,650
Total Units required
5,550
5,875
6,325
17,750
Less beginning Inventory
(1,100)
(1,150)
(1,275)
(3,525)
Production required
4,450
4,725
5,050
14,225
3
3)Direct Labor Budget
Particulars
January
February
March
Quarter
Production required
4,450
4,725
5,050
14,225
Direct labor required (Hours)
0.60
0.60
0.60
0.60
Total Hours required
2,670.00
2,835.00
3,030.00
8,535.00
Direct labor cost per hour
28
28
28
28
Total labor cost
74,760.00
79,380.00
84,840.00
238,980.00
4
4) Raw Material Budget
Particulars
January
February
March
Quarter
Production required
4,450
4,725
5,050
14,225
Add Desired Ending Inventory
945.00
1,010.00
1,187.50
3,142.50
Total Raw material available
5,395.00
5,735.00
6,237.50
17,367.50
Less beginning Inventory
(1,112.50)
(1,181.25)
(1,262.50)
(3,556.25)
raw material Purchased
4,282.50
4,553.75
4,975.00
13,811.25
Cost Per handishaw
7.00
7.00
7.00
7.00
Cost of Raw material budgeted
29,977.50
31,876.25
34,825.00
96,678.75
January
February
March
Quarter
Budgeted Sales revenue
228,800
239,200
265,200
733,200
Budgeted Production in units
4,450
4,725
5,050
14,225
Budgeted Cost of RM purchase
74,760
79,380
84,840
238,980
Budgeted Direct labour cost
29,978
31,876
34,825
96,679
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