E9-3b. uch manufacturing overhead should be incurred if fixed and variable manuf
ID: 2597809 • Letter: E
Question
E9-3b. uch manufacturing overhead should be incurred if fixed and variable manufacturing overhead is $1.50 per direct labor hour? manufacturing over e. How m E9-3B. Budget Preparation Tuttle Company is preparing its master budget for November. Use the estimale provided to determine the necessary amounts for each o the following requirements. (Estimates be related to more than one requirement.) a. What should total sales revenue be if territories N and S estimate sales of 40.000 and 80.0m units, respectively and the unit selling price is $18? b. If the beginning finished goods inventory is an estimated 6,000 units and the desired ending ventory is 5,000 units, how many units should be produced? What dollar amount of material should be purchased at $2 per pound if each unit of product requires 3 pounds and beginning and ending materials inventories should be 12,000 and 10,000 pounds, respectively? How much direct labor cost should be incurred if each unit produced requires 0.5 hours at an hourly rate of $10? How much manufacturing overhead should be incurred if fixed manufacturing overhead is $32,000 and variable manufacturing overhead is $1 per direct labor hour? c. d. e. 9-4B. Budgeting Cash Collections Lowell Consulting, which sells on terms 2/10, n/30, had credit sales for March and April of $60,000 and $50,000, respectively. Analysis of Lowell's operations indicates that the pattern of customers' payments on account is as follows (percentages are of total monthly credit sales): Beyond Period 20% Receiving Discount Discount Totals In month of sale In month following sale. 40% 15% 35% 20%Explanation / Answer
a. Total sales revenue for territories N and S will be as follows:
Territory N: 40,000 units*$18 = $720,000
Territory S: 80,000 units*$18 = $1,440,000
b. Units to be produced are calculated as below:
Details
Units
Total Sales Units (40,000+80,000)
120,000
Add: Desired ending inventory
5,000
Total units required
125,000
Less: Opening inventory
(6,000)
Total units to be produced
119,000
c. Dollar amount of material to be purchase is computed as under:
To compute the amount to be spent on material purchase, we need to first calculate the quantity of material to be purchased for the production of 119,000 units calculated above. Once we calculate it and adjust it with the opening and closing inventory, we will arrive at the quantity of material to be purchased and then multiplied by rate per unit will give us the amount to be spend on material:
Details
Units
Total material required for production @ 3 pounds/unit (119,000units*3 pound per unit)
357,000
Add: Desired ending inventory
10,000
Total material required
367,000
Less: Opening inventory
(12,000)
Total material to be purchased
355,000
Total amount to be spent on material purchase= 355,000pounds*$2/pound = $710,000
d. Total direct labour hours required for production: 119,000units*0.5hrs/unit = 59,500 hours
Direct labour cost: 59,500hours*$10/hour = $595,000
e. Total manufacturing overhead = Variable manufacturing overhead + Fixed manufacturing overhead
Details
Calculations
Amount ($)
Variable manufacturing overhead @ $1 per direct labour hour
59,500hours*$1/hour
59,500
Fixed manufacturing overhead
32,000
Total manufacturing overhead
91,500
Details
Units
Total Sales Units (40,000+80,000)
120,000
Add: Desired ending inventory
5,000
Total units required
125,000
Less: Opening inventory
(6,000)
Total units to be produced
119,000
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