Your job is to create the following: Overhead budget (for each quarter): Variable Overhead Rate ($/hr)...

Your job is to create the following:

Overhead budget (for each quarter):

Variable Overhead Rate ($/hr)

Budgeted Variable Overhead

Budgeted fixed overhead without depreciation

Depreciation

Total Overhead

Selling & Administrative Budget (for each quarter)

Planned sales in dollars

Variable S & A rate (per unit sold)

Variable S & A Expense

Fixed S & A Expense without depreciation

Depreciation

Total S & A Expense

		Diesel Dynamo Company
			Budget Project
			Fall 2017
INPUT SECTION
SALES
		4th	1st	2nd	3rd	4th
		Quarter	Quarter	Quarter	Quarter	Quarter
		2017	2018	2018	2018	2018
	Budgeted Sales in units	43,000	37,900	34,500	31,000	43,000

	Budgeted Selling Price	$530	per production unit (Finished Good)


RECEIVABLES
	Receivables Collection Schedule	91.50%	quarter of sale
		5.50%	quarter following sale
		3.00%	uncollectible
		100.00%
	Policy		Entire projected uncollectible receivables are written off each quarter

INVENTORY COSTS
	Direct Labor	4.5	hours
		$19.50	per direct labor hour

	Raw Materials	3	direct material units per finished good production unit
		$85.00	per raw material unit

	Variable Overhead	$9.50	per Direct Labor Hour

	Fixed Overhead
	Depreciation	$304,000	per quarter
	Other Fixed Overhead	$950,000	per quarter

	Fixed Overhead Application Rate	CALCULATE FROM PRODUCTION BUDGET

INVENTORY ACCOUNTS
		4th	1st	2nd	3rd	4th
	Ending Finished Goods Inventory	Quarter	Quarter	Quarter	Quarter	Quarter
	in units	0	15,000	19,000	20,000	15,000


	Raw Materials Inventory
	Beginning Inventory 1/1/2018	28,436	units

Solutions

Expert Solution

Answer:-

Working Notes:-

1)Calculation of fixed S & A expenses without depreciation=Average fixed cost*Budgeted sales units for the quarter.

Average fixed cost for the quarter=Total fixed cost/total units made for the quarter.

Total units made for the quarter=sales unit+closing units-opening units.

2) Depreciation is also to be calculated on sales units for the quarter

so, depreciation=Average depreciation*Budgeted sales units for the month

Average depreciation =Total depreciation for the quarter/Total units made for the quarter.

ekkarill92 answered 1 year ago

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