Question

In: Accounting

Q. Cabal makes a product that has the following information for the second quarter of 2018....

Q. Cabal makes a product that has the following information for the second quarter of 2018.

  

Jan feb march April May June July
Sales 10,000 11,400 12,100 13,300 15,000 13,600 14,400

They have a policy of keeping 20% of the next month's sales as a target ending inventory. The products require 2 hours of direct labour to make 1 unit at $20 per hour.

1.) Prepare a production budget for the second quarter.

2.) Prepare a labour usage budget and a purchases budget for the second Quarter.

Solutions

Expert Solution

1)
Production Budget
For the Second Quarter
April May June
Sales               13,300               15,000               13,600
Add:Ending Inventory                 3,000                 2,720                 2,880
Total Units available for sale               16,300               17,720               16,480
Less:Beginning Inventory                 2,660                 3,000                 2,720
Units to be produced               13,640               14,720               13,760
2) Labour Usage Budget
April May June
Units to be produced               13,640               14,720               13,760
Direct Labour per unit 2 2 2
Total Direct Labour               27,280               29,440               27,520
Labour cost per hour $ 20 $ 20 $ 20
Total Labour cost $       5,45,600 $       5,88,800 $       5,50,400

ekkarill92 answered 2 years ago
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