Question
In: Accounting
The Mullins Company finished their sales projections for the coming year. The company produces one product....
The Mullins Company finished their sales projections for the coming year. The company produces one product. Part of next year's sales projections are as follows.
Projected Sales in Units
| July | 150,000 |
| August | 170,000 |
| September | 164,000 |
| October | 180,000 |
| November | 205,000 |
The budget committee has also completed the following information on inventories.
Raw Materials
Ending Balance, June, 25,000 lbs
Desired ending levels (monthly 5% of next month's production needs)
Work-In-Progress
None
Finished Goods Inventory
Ending Balance, June, 14,000 units
Desired ending levels: 15% of next month's sales
The Engineering Department has developed the following standards upon which the production budgets will be developed.
| Item | Standard |
|---|---|
| Material usage | 4 pounds per unit |
| Material price per pound | $1.80 per pound |
| Labor usage | 0.4 hours per unit |
| Labor rate | $35 per hour |
| Machine hours | 3 machine hours per unit |
The Mullins Company uses a modified allocation method for allocating overhead costs. The rates that will be used in the coming year are as follows.
| Overhead Item | Allocation Rate |
|---|---|
| Utilities | $0.60 per machine hour |
| Inspection | $11 per unit produced |
| Factory supplies | $3 per unit produced |
| Depreciation | $40,000 per month |
| Supervision | $15,000 per month |
Prepare the following production budgets for July, August, and September for the Mullins Company.
- Production Budget
- Materials Purchases Budget
- Direct Labor Budget
- Overhead Budget
- Manufactured Budget (for the quarter, quarter totals only)
Solutions
ekkarill92 answered 1 year agoRelated Solutions
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