11/12/2017 CengageNow21 Online tesaching and leaming resource trom Cengage Leami
ID: 2569472 • Letter: 1
Question
11/12/2017 CengageNow21 Online tesaching and leaming resource trom Cengage Leaming Operating Budget, Comprehensive Analysis Allson Manufacturing produces a subassembly used in the production of jet aircraft engines. The assembly is sold to engine manu maintenance facilities. Projected sales in units for the coming five months follow: 40,000 50,000 60,000 60,000 62,000 March April May The following data pertain to production policies and manufacturing specifications followed by Allison Manufacturing: a. Finished goods inventory on January 1 is 32,000 units, each costing si 66.06. The desired ending inventory for each month is 80% of the next months b. The data on materials used are as follows: Direct Material Per-Unit Usage DM Unit Cost(s) Metal 10 lbs. Inventory policy dictates that sufficient materials be on hand at the end of the month to produce 50% of the next month's production needs. This is exactly the amount of material on hand on December 31 of the prior year c. The direct labor used per unit of output is three hours. The average direct labor cost per hour is $14.25. d. Overhead each month is estimated using a flexible budget formula. (Note: Activity is measured in direct labor hours.) Fixed-Cost Variable-Cost Component () Component ($) 1.00 0.50 0.40 Supplies Power 30,000 16,000 200,000 12,000 Taxes http:/v2.cengagenow 1/5Explanation / Answer
c.
Calculations:
d.
Allison Manufacturing Direct Materials Purchases Budget For the Quarter Ended March 31 January January February February March March Total Total Metal Components Metal Components Metal Components Metal Components Units to be produced 48000 48000 58000 58000 60000 60000 166000 166000 Direct materials per unit 10 6 10 6 10 6 10 6 Production needs 480000 288000 580000 348000 600000 360000 1660000 996000 Desired ending inventory 290000 174000 300000 180000 308000 184800 308000 184800 Total needs 770000 462000 880000 528000 908000 544800 1968000 1180800 Less: Beginning inventory 240000 144000 290000 174000 300000 180000 240000 144000 Direct materials to be purchases 530000 318000 590000 354000 608000 364800 1728000 1036800 Cost per unit $ 8 5 8 5 8 5 8 5 Total cost $ 4240000 1590000 4720000 1770000 4864000 1824000 13824000 5184000Related Questions
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