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 $52. Wesley expects the following unit sales: January February March April May 4,400 4,600 5,100 4,900 4,300 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. 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 are7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month. Required 1. Compute the following for the first quarter: (Do not round your intermediate calculations.) Februany March 1st Quarter total 733.200 14,225 January $228,800 S 239,200 265,200 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 4,450 4.725 5,050

Explanation / Answer

Required information is as calculated below:

1. Sales Budget Wesley Power Tools Sales Budget For the quarter ended March 31 Month Particulars January February March Total Sale Units (a) 4,400 4,600 5,100 14,100 *Price per unit (b) $52 $52 $52 $52 Total Sales (a*b) $228,800 $239,200 $265,200 733,200 2. Production Budget Wesley Power Tools Production Budget For the quarter ended March 31 Month Particulars January February March Total April Sale Units (a) 4,400 4,600 5,100 14,100 4,900 Planned ending units (b) (25% of next month sales) 1,150 1,275 1,225 1,225 1075 Beginning units (c ) 1,100 1,150 1,275 1,100 1,225 Planned production units (d)= (a+b-c) 4,450 4,725 5,050 14,225 4,750 3. Raw material Budget Wesley Power Tools Raw Material Purchase Budget For the quarter ended March 31 Month Particulars January February March Total Planned production units (a) 4,450 4,725 5,050 14,225 4,750 *Direct Material required per unit (b) 1.0 1.0 1.0 10.0 1.0 Direct Material Required for production (c ) 4,450 4,725 5,050 142,250 4,750 Budgeted ending Direct Material (d) 945 1,010 950 837 Beginning Direct Material (e ) 890 945 1,010 675 Budgeted direct material purchase f= c+d-e 4,505 4,790 4,990 142,412 Cost per unit (g) $7.0 $7.0 $7.0 $7.0 BudgetedDM purchases $31,535 $33,530 $34,930 996,884 4. Direct labour Budget Wesley Power Tools Direct Labour Budget For the quarter ended March 31 Month Particulars January February March Total Planned production units (a) 4,450 4,725 5,050 14,225 *Direct labour required per unit (b) 0.6 0.6 0.6 0.6 Budgeted Direct labour hours 2,670 2,835 3,030 8,535 Cost per direct labour hour 28 28 28 28 Budgeted Direct labour Cost $74,760 $79,380 $84,840 $238,980

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