Question

The Jarrad Corporation's management team is getting ready to prepare its master budget for one it...

The Jarrad Corporation's management team is getting ready to prepare its master budget for one its product lines for the year 2019. The company produces caramel lollipops which are basically cooked down sugar on a stick, a diabetics nightmare along with many other sweet treats.

Budgeted sales of the lollipops for each quarter of 2019 are as follows:

1st Quarter-12,500 cases

2nd Quarter-14,000 cases

3rd Quarter-25,500 cases

4th Quarter-34,900 cases

There are 100 lollipops in a case and each sells for $200. Jarrad is budgeting a 5% sales price increase effective July 1,2019

The 4th Quarter 2018 sales have been budgeted at 32,000 cases and Jarrad wants to have an ending inventory carried over into 2019 of 2,000 cases.

At the end of 2019 they desire an ending inventory of 2,250 cases. Each quarter an additional 10% of that quarter's sales is to be produced as an ending inventoy to be carried over into the following quarter.

Materials:

Sugar costs the company $3.20 per lb. (16 ounces) Each lolllipop is 2 ounces of sugar which is melted down into caramel. The caramel is coated in 2 ounces of Belgian chocolate which costs the company $.28 per ounce. Each lollipop stick costs $.03

Direct Labor and Machine Hours:

The production of these lollipops is a highly automated one requring only 45 minutes to produce one case of lollipops. Of this 45 minutes, 30 minutes are automated and 15 minutes requires human interaction. The cost of running the machines during the year based on 4,500 hours is $8.75 per hour. Budget these hours evenly over the four quarters of 2019. The direct labor rate per hour is $11. The budgeted cost of operating the machinery is included in the manufacturing overhead budget for the year.

Cases of lollipops produced in 2019:

1st Quarter $1,175,000 ,  2nd Quarter $1,415,000 , 3rd Quarter $2,665,000 , 4th Quarter $3,460,000

Total production of lollipops in 2019 : $ 8,715,000

Budget cost of the sugar which is required to produce the total number of lollipop to be produced in 2019: $3,486,000.

Budget cost of the chocolate which is required to produce the total number of lollipop in 2019: $305,025

Budget cost of the lollipop sticks which are required to produce the lollipops in 2019: $261,450

-How many budgeted direct labor hous will be required to produce the total number of cases of lollipops for 2019? ................................. hours

-What is the budgeted direct labor cost for 2019? $..................................

Answer 1