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Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 7 pounds of direct materials at a...

Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 7 pounds of direct materials at a cost of $4 per pound and 0.4 direct labor hours at a rate of $18 per hour. Variable manufacturing overhead is charged at a rate of $3 per direct labor hour. Fixed manufacturing overhead is $4,500 per month. The company’s policy is to maintain direct materials inventory equal to 30% of the next month’s materials requirement. At the end of February the company had 5,980 pounds of direct materials in inventory. The company’s production budget reports the following.

Production Budget March April May
Units to be produced 3,600 5,100 5,600


(1) Prepare direct materials budgets for March and April.
(2) Prepare direct labor budgets for March and April.
(3) Prepare factory overhead budgets for March and April.

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Expert Solution

Answer-1)-

Ornamental Sculptures Mfg.
Direct Material Budget
For the months of March & April
PARTICULARS March April
Budgeted production in units (a) 3600 5100
Pounds of Raw material required per unit (b) 7 pounds 7 pounds
Raw material required for production in pounds (c=a*b) 25200 35700
Add:- Desired ending inventory (pounds) (35700 pounds*30%) = 10710 pounds (39200 pounds*30%) = 11760 pounds
Less:-Opening inventory (pounds) 5980 pounds 10710 pounds
Budgeted Raw material purchase (pounds) (d) 29930 36750
Direct material cost per Ib. (e) $4 $4
Total budgeted direct materials (f=d*e) $ 119720 147000

2)-

Ornamental Sculptures Mfg.
Direct Labor Budget
For the months of March & April
Particulars March April
Budgeted Production units (a) 3600 5100
Direct labor hours per unit (b) 0.4 0.4
Total direct labor hours (c=a*b) 1440 2040
Wage per direct labor hour (d) $18 $18
Total budgeted direct labor in $ (e=c*d) 25920 36720

3)-

Ornamental Sculptures Mfg.
Manufacturing Overhead Budget
For the months of March & April
Particulars March April
$ $
Total direct labor hours needed (a) 3600 5100
Variable overhead per hour (b) $3 $3
Budegted Variable overhead (c=a*b) $ 10800 15300
Budegetd Fixed overhead (d) $ 4500 4500
Total budgeted factory overhead (e=c+d) $ 15300 19800

ekkarill92 answered 2 years ago
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