ABC Company limited produces coat racks. The projected sales for the first quarter of the coming...

ABC Company limited produces coat racks. The projected sales for the first quarter of the coming year and the beginning and ending inventory data are as follows:

Sales	100,000 units
Unit price	SAR 15
Beginning inventory	8,000 units
Targeted ending inventory	12,000 units

The coat racks are molded and then painted. Each rack requires four pounds of metal, which cost SAR 2.50 per pound. The beginning inventory of materials is 4,000 pounds. ABC Company Limited wants to have 6,000 pounds of metal in inventory at the end of the quarter. Each rack produced requires 30 minutes of direct labor time, which is billed at SAR 9 per hour.

Required:

1. Prepare a sales budget for the first quarter.

2. Prepare a production budget for the first quarter.

3. Prepare a direct materials purchases budget for the first quarter.

4. Prepare a direct labor budget for the first quarter.

Solutions

Expert Solution

Solution 1:

Sales Budget -ABC Company
Particulars	Quarter 1
Sales units	100000
Selling price per unit	15

Budgeted Sales Revenue	1,500,000.00

Solution 2:

Production Budget - ABC Company
Particulars	Quarter 1
Sales units	100000
Add: Desired ending inventory	12000
Less: Opening Inventory	8000

Budgeted Production units	104000

Solution 3:

Direct Material PurchaseBudget - ABC Company
Particulars	April
Budgeted Production Units	104000
Material needed per unit	4
Material needed for budgeted production	416000
Add: Desired units of material in ending inventory	6000
Less: units of material in beginning inventory	4000

Budgeted material purchase units	418000
Raw material cost per unit	2.5
Budgeted purchases of Direct material	1,045,000.00

Solution 4:

Direct Labor Budget - ABC Company
Particulars	Quarter 1
Budgeted Production Units	104000
Direct labor hours per unit	0.5
Direct labor hour required	52000
Rate per direct labor hours	9

Budgeted direct labor cost	468,000.00

ekkarill92 answered 1 year ago

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