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First Class, Inc., expects to sell 29,000 pool cues for $13 each. Direct materials costs are...

First Class, Inc., expects to sell 29,000 pool cues for $13 each. Direct materials costs are $3, direct manufacturing labor is $5, and manufacturing overhead is $0.83 per pool cue. The following inventory levels apply to 2019:


Beginning inventory Ending inventory

Direct materials 24,000 units 24,000 units

Work-in-process inventory 0 units 0 units

Finished goods inventory 1,200 units 2,800 units


What are the 2019 budgeted costs for direct materials, direct manufacturing labor, and manufacturing overhead, respectively?

Solutions

Expert Solution

DETAILS GIVEN IN QUESTION:

SALE UNITS = 29000 POOL CUES

SELL PRICE = $13 each.

Direct materials costs = $3 per pool cue

Direct manufacturing labor = $5 per pool cue

Manufacturing overhead = $0.83 per pool cue.

Inventory levels of 2019:

Beginning inventory Ending inventory

Direct materials 24,000 units 24,000 units

Work-in-process   0 units 0 units

Finished goods 1,200 units 2,800 units

FIND 2019 budgeted costs.

ANSWER:

a. PRODUCTION BUDGET FOR 2019

PARTICULARS UNITS
SALES 29,000
(+) CLOSING INVENTORY OF FINISHED GOODS 2,800
(-) OPENING INVENTORY OF FINISHED GOODS (1,200)
PRODUCTION 30,600

b. DIRECT MATERIAL PURCHASED:

PARTICULARS UNITS
CONSUMPTION (same as PRODUCTION ) 30,600
(+) CLOSING INVENTORY OF DIRECT MATERIAL 24,000
(-) OPENING INVENTORY OF DIRECT MATERIAL (24,000)
PURCHASE OF DIRECT MATERIAL 30,600

HENCE, 2019 Budgeted costs.

(i) DIRECT MATERIAL = PURCHASE UNITS x PRICE PER UNIT = 30,600 x $ 3 = $ 91,800

(ii) DIRECT MANUFACTURING LABOR = PRODUCTION UNITS x COST PER UNIT = 30,600 x $ 5 = $ 153,000

(iii) MANUFACTURING OVERHEAD = PRODUCTION UNITS x COST PER UNIT = 30,600 x $ 0.83 = $ 25,398

ekkarill92 answered 1 year ago
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