Question

Course: Management and Cost Accounting

Question 1: Budgets

Top Woods Co. is a desk manufacturer. It makes two products, the 'Executive desks' and the 'Chairman desks'. The budgeted information for each product for March 2018 is as follows:

Standard material and labour costs:

                                                                                                            $

Oak top (per square foot)                                                                   20                               

Red oak top (per square foot)                                                            25

Oak legs (per leg)                                                                               12

Red oak legs (per leg)                                                                        18

Manufacturing labour cost per hour                                                    30       

The standard material and labour usage for each product is as follows:

                                                                       Executive desk                       Chairman desk

Oak top                                                          16 square feet                         -

Red oak top                                                   -                                              25 square feet

Oak legs                                                         4                                             -

Red oak legs                                                  -                                              4

Direct manufacturing labour                          3 hours                                   5 hours

Other relevant data is as follows for March 2018:

Direct material beginning inventory:

                                                                       Executive desk                       Chairman desk

Oak top (square feet)                                     320                                         -

Red oak top (square feet)                              -                                              150

Oak legs                                                         100                                         -

Red oak legs                                                  -                                              40

Direct materials ending inventory:

                                                                       Executive desk                       Chairman desk

Oak top (square feet)                                     192                                         -

Red oak top (square feet)                              -                                              200

Oak legs                                                         80                                           -

Red oak legs                                                  -                                              44

Finished goods inventory:

                                                                       Executive desk                       Chairman desk

Beginning inventory in units                           20                                           5

Ending inventory in units                              30                                           15

Manufacturing overhead (fixed and variable) is allocated to each desk on the basis of budgeted direct manufacturing labour hours. The budgeted variable manufacturing overhead rate for March 2018 is $35 per direct manufacturing labour hour. The budgeted fixed manufacturing overhead for March 2018 is $42,500.

Budgeted sales for March 2018 are 740 units of the Executive desks and 390 units of the Chairman desks. The budgeted selling prices per unit in March 2018 are $1,020 for the Executive desk and $1,600 for the Chairman desk.

Required:                                          ALL CALCULATIONS MUST BE SHOWN

Prepare the functional budgets for March 2018 as follows:

(a)  Sales budgets           

                                                                                      

(b)  Production budget  

                                                                                   

(c)   Direct materials usage budget

(d)  Direct materials purchases budget

                                                       

(e)   Direct manufacturing labour budget         

                                                    

(f)   Manufacturing overhead budget.

Note: Show also the calculation of the fixed manufacturing overhead cost per hour and total manufacturing overhead cost per hour.   

Note:

Hello! If you are not sure how to fulfill all the requirements needed, please do not attempt the question.

Your help is very much appreciated. Thank you.

Answer 1

Answer 1.
Sales Budget
For the Month Ending March 31, 2018
	Unit Sales Volume	Unit Selling Price	Total Sales
Executive Desks	740	1,020	754,800
Chairman Desks	390	1,600	624,000
Total revenue from sales			1,378,800
Answer 2.
Production Budget
For the Month Ending March 31, 2018
	Units
	Executive Desks	Chairman Desks
Expected Units to be sold	740	390
Add: Desired Inventory - Mar 31	30	15
Total	770	405
Less: Estimated Inventory - Mar 1	(20)	(5)
Total Units to be produced	750	400
Answer 3.
Direct Material Usage Budget
For the Month Ending March 31, 2018
	Oak Top	Oak Legs	Red Oak Top	Red Oak Legs
Expected Production	750.00	750.00	400.00	400.00
Required per Unit	16.00	4.00	25.00	4.00
Units required for production	12,000.00	3,000.00	10,000.00	1,600.00
Answer 4.
Direct Material Purchase Budget
For the Month Ending March 31, 2018
	Oak Top	Oak Legs	Red Oak Top	Red Oak Legs
Units required for production	12,000.00	3,000.00	10,000.00	1,600.00
Add: Desired Units of Inventory - Mar 31	192	80	200	44
Total Needs	12,192	3,080	10,200	1,644
Less: Estimated Units of inventory - Mar 1	(320)	(100)	(150)	(44)
Total Units to be purchased	11,872	2,980	10,050	1,600
Units Price	20	12	25	18
Total Direct Material to be purchased	237,440	35,760	251,250	28,800