Question

24. The Cat & Company Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, the corporation’s budget department gathered the following data to prepare budgets for 2014:

2014 Projected Sales:

Product                               Units                     Price

Thingone             62,000 units        $172

Thingtwo             46,000 units        $264

2014 Projected Inventory in Units:

Product                               January 1, 2014 December 31,2014

Thingone                  21,000                                                 26,000

Thingtwo                  13,000                                                 14,000

The following direct materials are used in the two products

Amount Used per Unit

Direct Material                  Unit                       Thingone             Thingtwo

A                             pound                           5                            6

B                             pound                           3                            4

C                             each                              0                            2

Projected data for 2014 for direct materials are:

                                   Anticipated              Expected Inventories           Expected Inventories

Direct Material     Purchase Price              January 1,2014     December 31, 2014

A                             $11                        37,000 lb.                                             40,000 lb.                                 

B                             $6                           37,000 lb.                                             35,000 lb.

C                             $5                           10,000 units                                       12,000 units

Projected direct manufacturing labor requirements and rates for 2014 are:

Product                               Hours per Unit                  Rate per Hour

Thingone                        3                                      $11

Thingtwo                        4                                      $14

Manufacturing overhead is allocated at the rate of $19 per direct manufacturing labor-hour. Based on the preceding projections and budget requirements for Thingone and Thingtwo, answer the following questions:

1. What is the total projected revenue in dollars?
2. What are the production requirements for each product?
3. What is the direct material purchases budget in quantities?
4. What is the direct material purchases budget in dollars?
5. What is the direct manufacturing labor budget in dollars?
6. What is the budgeted finished goods inventory at December 31,2014 in dollars?

Answer 1

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