Question

1. Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin

   Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiner’s master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 6,900 glare filters in inventory on December 31 of the current year, and has a policy of carrying 35 percent of the following month’s projected sales in inventory. Information on the first four months of the coming year is as follows:

   	January	February	March	April
   Estimated unit sales	35,600	35,600	40,800	39,200
   Sales price per unit	$83	$83	$76	$76
   Direct labor hours per unit	2.70	2.70	2.40	2.40
   Direct labor hourly rate	$16	$16	$18	$18
   Direct materials cost per unit	$10	$10	$10	$10

   Required:
   Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.

   1. Prepare the following monthly budgets for Greiner Company for the first quarter of the coming year.

   a. Production budget in units:

   Greiner Company
   Production Budget (units)
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Unit sales	35,600	35,600	40,800	39,200
   Desired ending inventory
   Total units required
   Less: Beginning inventory
   Units produced

   Feedback

   b. Direct labor budget in hours: Round your answers to two decimal places, if required.

   Greiner Company
   Direct Labor Budget (hours)
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Units produced
   Direct labor hours per unit	2.7	2.7	2.4
   Total labor budget (hours)

   Feedback

   c. Direct materials cost budget:

   Greiner Company
   Direct Materials Cost Budget
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Units produced
   Cost per unit	$	$	$	$
   Total direct materials	$	$	$	$

   Feedback

   d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.

   Greiner Company
   Sales Budget (dollars)
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Unit sales
   Unit selling price	$	$	$	$
   Total sales revenue	$	$	$	$

   Feedback

   2. Calculate the total budgeted contribution margin for Greiner Company by month and in total for the first quarter of the coming year. (CMA adapted)

   Greiner Company
   Budgeted Contribution Margin
   For the First Quarter of the Coming Year
   	January	February	March	Total
   Sales revenue	$	$	$	$
   Direct labor cost
   Materials cost
   Contribution margin	$	$	$	$

Answer 1