Question

Budget Preparation
Collins Company is preparing its master budget for April. Use the given estimates to determine the amounts necessary for each of the following requirements. (Estimates may be related to more than one requirement.)

a. What should total sales revenue be if territories A and B estimate sales of 10,000 and 12,000 units, respectively, and the unit selling price is $40?

$Answer

b. If the beginning finished goods inventory is an estimated 2,000 units and the desired ending inventory is 3,000 units, how many units should be produced?

Answer

c. What dollar amount of material should be purchased at $4 per pound if each unit of product requires 3 pounds and beginning and ending materials inventories should be 5,000 and 4,000 pounds, respectively?

$Answer

d. How much direct labor cost should be incurred if each unit produced requires 1.5 hours at an hourly rate of $13?

$Answer

e. How much manufacturing overhead should be incurred if fixed manufacturing overhead is $50,000 and variable manufacturing overhead is $2.50 per direct labor hour?

$Answer

Answer 1

Req a.
Sales budget
			A	B	Total
Sales units			10000	12000	22000
Selling price			40	40	40
Budgetd Sales in $			400000	480000	880000
Req b:
Budgetdd sales units			22000
Add: Desired ending inventory			3000
Total Requirement			25000
Less: Beginning Inventory			2000
Budgetd Production units			23000
Req c:
Budgeted production units			23000
Raw material req per unit			3
Total Production needs			69000
Add: Ending inventory			4000
Total needs			73000
Less: Beginning Inventory			5000
Budgeted Purchase units			68000
Cost per unit			4
Budgeted Purchase in $			272000
Req d:
Budgetd Production units			23000
Labour hours per unit			1.5
Budgetdd Labour hourrs			34500
Labour rate per hour			13
Budgeted Labour cost in $			448500
Req e:
Budgetd Labour hours			34500
Variable OH cost per unit			2.5
Budgetd Variable OH			86250
Budgeted Fixed OH			50000
Budgeted Manufacturing OH			136250