Question

Rickard Enterprises—March Budget

FACTS

Total Sales per Quarter (sales are even per month)

Quarter Units Price/Unit

Q1 4,200 $18

Q2 6,600. $21

Q3 5,900 $20

Q4 9,700 $22

March Inventory Beginning Desired Ending

Raw materials inventory (in lbs.)       1,120 1,760

Raw materials inventory (in $)   $8,960 $14,080

Finished goods (FG) inventory (in units) 280 440

Finished goods inventory (in $) $41,500   $34,500

20% (safety stock desired)

Other Information:

Pounds of materials needed to produce each unit of FG 4

Cost per lb. of raw material $8

Labor hours needed per unit. 0.75

Hourly wage rate: $16

VOH rate (based on direct labor hours) $4

Fixed overhead (annual):

Rent =$19,200

Utilities (fixed monthly rate) =$9000

Property taxes =$7500

As part of the annual budget process, Rich Render has to present his forecasted manufacturing costs for the Transmode Product Line for the upcoming fiscal year. Render's task is to develop a budget for materials, labor, and overhead costs based on projected sales and production for the year. He has asked you to prepare the budget for the month of March through the development of a template that can be used to easily adjust variables if needed.

Using the information included within the exhibit, complete the table below:

• For the table below, calculate the answers to the questions in column A for the month of March and enter your associated response in dollars or units as appropriate in column B (round to whole numbers).

AB

Projection (March Totals)	Amount
Sales (in units)
Production (in units)
Direct materials usage (in dollars)
Direct labor costs (in dollars)
Variable overhead costs (in dollars)
Fixed overhead costs (in dollars)

Answer 1

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Sales (in units)
Quarter Sale		4,200	units
March Month Sale	4,200/3	1,400	units
Production in Unit
Budgeted Sale in units		1,400
Add: Desired ending inventory		440
Total Available		1,840
Less: Beginning Inventory		-280
Budgeted Production		1,560
Direct Material usage
Budgeted Production		1,560
Raw material needed for one unit of FG		4
Total Raw material needed for production		6,240
Raw material cost per unit		$                8
Budgeted Direct Material usage		$     49,920
Direct Material Cost
Budgeted Production		1,560
Hours needed for one unit of FG		0.75
Total Hours required		1,170
Labor cost per hour		$              16
Budgeted Direct Labor Cost		$     18,720
Variable overhead cost
Budgeted Hours		1,170
Variable overhead rate		$                4
Budgeted Variable Overhead		$        4,680
Fixed overhead cost
Rent	$19,200/12	$        1,600
Utilities	$9,000/12	$           750
Property Tax	$7,500/12	$           625
Budgeted Fixed overhead cost		$        2,975