Question

Scarlett Company Master Budget
Scarlett Company is preparing its annual budgets for the year. Accounting assistants furnished the
information shown below for its single product.
Sales budget:
Anticipated volume in units					400,000
Unit selling price					$20.00
Production budget:
Desired ending finished goods units					30,000
Beginning finished goods units					25,000
Direct materials budget:
Direct materials per unit (pounds)					2
Desired ending direct materials (pounds)					30,000
Beginning direct materials (pounds)					40,000
Cost per pound					$3.00
Direct labor budget:
Direct labor hours per unit					0.4
Direct labor rate per hour					$12.00
Please prepare the following budgets for the year:
Sales
Production
Direct materials
Direct labor

Answer 1

Solution:

Scarlett Company
Sales Budget
Particulars	year
Anticipated volume in units	400000
Selling Price per unit	$20.00
Budgeted Sales	$80,00,000
Production Budget
Particulars	Year
Budgeted unit sales	400000
Add: Desired ending finished goods units	30000
Total Needs	430000
Less: Beginning finished goods units	25000
Required Production in units	405000

Scarlett Company
Direct Materials Budget
Particulars	July
Required Production in Units	405000
Direct materials per unit (pounds)	2
Units of Raw materials needed to Meet production	810000
Add: Desired ending direct materials (pounds)	30000
Total units of materials needed	840000
Less: Beginning direct materials (pounds)	40000
Units of Direct Materials to be Purchased	800000
Cost per pound	$3.00
Cost of Material to be purchased	$24,00,000
Scarlett Company
Direct Labor Budget
Particulars	July
Required Production in Units	405000
Direct labor hours per unit	0.4
Total Hours needed	162000
Direct labor rate per hour	12
Direct labor cost	$19,44,000