Question

Need answers 1-4!

1. Projected unit sales: June sales 120,000, July sales 130,000, August 140,000, September 150,000 and October sales 170,000.
2. Sales price per unit, $15.00
3. Units in ending inventory each month should equal 10% of next month sales.
4. Raw material required per unit is 2 pounds; cost is $3.00 per lb.
5. Ending inventory required at the end of each month is 5% of next month needs.
6. Direct labor required to produce one units is .25 direct labor hour. The hourly rate is $10.00.
7. Sales and administrative expenses are projected to be: salaries $275, 000 per month, commissions 2% of sales dollars and other expenses are expected to be $75,000 per month plus 3% of sales dollars.
8. Forty percent of the sales are collected in the month of sales and 60 percent in the month following.
9. Thirty percent of raw materials purchases are paid in in the month of purchase and 70 percent in the month following.
10. Manufacturing overhead costs:

1. Indirect labor, $3.00 per direct labor hour,
2. Indirect materials are $1.00 per unit produced,
3. Utilities are $1.00 per direct labor hour,
4. Maintenance cost are $0.50 per direct labor hour,
5. Supervisor salaries are $40,000 per month,
6. Depreciation is $10,000 per month,
7. Property taxes are $5,000 per month,
8. Insurance is $7,000 per month, and
1. Fixed maintenance cost is $10,000 per month.

Other pertinent information:

1. Beginning cash balance is $100,000
2. Beginning accounts payable balance is $530,000.

For the quarter ending September 30^th provide answers for the following:

1. Sales in units and dollars,
2. Units produced,
3. Cost of raw material,
4. Direct labor cost,
5. Manufacturing overhead cost,
6. Sales and administration cost,
7. Cost of ending finished goods inventory,
8. Cash balance at September 30^th
9. Contribution margin,
10. Net operating income,
11. Break even sales dollars,
12. Sales dollars needed to earn a net operating income of $400,000,
13. Ending accounts receivable balance,
14. Predetermined manufacturing overhead rate using direct labor hours as the activity, and
15. Ending accounts payable balance for raw materials.

Answer 1

Part 1 – Sales

Sales Budget
	July	August	September	Total for Quarter
Expected Unit Sales	130,000	140,000	150,000	420,000
Unit Selling Price	$15	$15	$15	$15
Budgeted Sales in dollars	$1,950,000	$2,100,000	$2,250,000	$6,300,000

Part 2 –

Production Budget
	July	August	September	Quarter
Next Month's Expected Sale Units	140000	150000	170000
Ratio of Ending Inventory to unit sales	10%	10%	10%
Desired Ending Inventory	14000	15000	17000
Plus: Budgeted units sales	130,000	140,000	150,000
Total Needs	144,000	155,000	167,000
Less: Estimated Beginning Inventory (Ending Inventory of last month)	13,000	14,000	15,000
Required Production in units	131,000	141,000	152,000	424,000

Part 3 - Cost of raw material,

Ending inventory of raw materials in September month is not given.

4) Direct labor cost,

Direct Labor Budget
	July	August	September	Quarter End
Budgeted Production (units)	131,000	141,000	152,000
Direct labor hours needed per unit	0.5	0.5	0.5
Total Direct Labor Hours Required	65,500	70,500	76,000
Direct labor cost per hour	$10	$10	$10
Budgeted Direct Labor Cost	$655,000	$705,000	$760,000	$2,120,000

Hope the above calculations, working and explanations are clear to you and help you in understanding the concept of question.... please rate my answer...in case any doubt, post a comment and I will try to resolve the doubt ASAP…thank you

Pls ask separate question for other parts problems