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Redford Corporation Manufacturing Budget Redford Corporation, a maker of high-strength umbrellas, is preparing a preliminary manufacturing...

Redford Corporation

Manufacturing Budget

Redford Corporation, a maker of high-strength umbrellas, is preparing a preliminary manufacturing budget for the year 2019.

They have gathered the following estimate data from various teams:

Production units

400,000

Materials - metal rods/clasps

$0.40

per unit, before wastage

Materials - high-strength fabric

$1.20

Per sq. yard

Materials - Resin handles

$0.25

per unit

Direct Labor - Cutting and Assembly Line

$28.00

Per hour

Packing & Inspection Costs (variable)

$300.00

Per batch

Factory fixed costs

$        300,000

Per Year

Additional information given:

Roughly 5% of metal parts are damaged or defective and are discarded as wastage

Each umbrella uses 1.5 sq. yards of high-strength fabric

Roughly 10% of the initial fabric quantity is not usable in the umbrellas due to the cutting process, but 20% of the value of this fabric is recovered by selling the unused pieces to a dealer

The current process uses roughly 20 hours of direct labor (cutting and assembly line) per batch of umbrellas

Each batch has 200 umbrellas

Q1. Prepare a Manufacturing Cost Budget for 2019 by quarter, assuming flat activity and equal-length quarters (do not adjust for days)

Q2. Prepare a High Case budget alternative assuming that production ramps up 50% in the second half. In this scenario, assume fixed costs increase by $60,000/yr. due to need for additional storage space, while variable cost structure is unchanged.

Please use Excel and show the formulas so I can better understand this. Thank you!

Solutions

Expert Solution

Requirement Q1
Redford Corporation
Manufacturing cost budget for 2019
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
production units 100000 100000 100000 100000 400000
Materials-metal rods/clasps 40000 40000 40000 40000 160000
Materials-High strengh Fabric 176400 176400 176400 176400 705600
Materials Resin handles 25000 25000 25000 25000 100000
Direct cutting and assembly 280000 280000 280000 280000 1120000
Packing and inspection costs 150000 150000 150000 150000 600000
Fixed Factory cost 75000 75000 75000 75000 300000
Total manufacturing cost 746400 746400 746400 746400 2985600
Working Notes
Calculation of
Materials -metals & clasps =100000*0.4 40000 For each quarter
Materials-High strength fabric =100000*1.2*1.5 180000
Less : Value of fabric recoved =180000*10%*20% 3600
Net Materials cost of fabric 176400 For each quarter
Materials Resin handles =100000*0.25 25000 For each quarter
Direct cutting and assembly =20/200*28*100000 280000 For each quarter
Packing and inspection costs =100000/200*300 150000 For each quarter
Fixed Factory cost =300000/4 75000 For each quarter
Requirement Q2
Redford Corporation
Manufacturing cost budget for 2019
Quarter 1 Quarter 2 Quarter 3 Quarter 4 Total
production units 100000 100000 150000 150000 500000
Materials-metal rods/clasps 40000 40000 60000 60000 200000
Materials-High strengh Fabric 176400 176400 264600 264600 882000
Materials Resin handles 25000 25000 37500 37500 125000
Direct cutting and assembly 280000 280000 420000 420000 1400000
Packing and inspection costs 150000 150000 225000 225000 750000
Fixed Factory cost 75000 75000 105000 105000 360000
Total manufacturing cost 746400 746400 1112100 1112100 3717000
Working Notes for second half
Calculation of
Materials -metals & clasps =150000*0.4 60000 For each quarter of second half
Materials-High strength fabric =150000*1.2*1.5 270000
Less : Value of fabric recoved =270000*10%*20% 5400
Net Materials cost of fabric 264600 For each quarter of second half
Materials Resin handles =150000*0.25 37500 For each quarter of second half
Direct cutting and assembly =20/200*28*150000 420000 For each quarter of second half
Packing and inspection costs =150000/200*300 225000 For each quarter of second half
Fixed Factory cost =300000/4+30000 105000 For each quarter of second half
Note: Increased in fixed factory cost by $60000 can be allocated to all quarters equally. However, we have
assumed that additional storage space is hired in second half and thus allocated this cost to quarters of
second half only.

ekkarill92 answered 1 year ago
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