Question

Note: I need a step by step answer to the following problem to better understand how this works.

Hot Coffee Manufacturing produces and sells oak tables. The budgeted   manufacturing costs per table are as follows:

Direct costs

                Oak top                48 square feet at $10 per sq. ft.

                Table legs                 4 legs at $5 per leg

Direct labor is 3 hours and 24 minutes per table at $15 per hour.

The variable overhead rate is $6 per direct labor hour and the fixed overhead rate is $8 per direct labor hour.

Inventories are expected to be as follows:

	Beginning	Target Ending
Direct Materials
Oak tops	500	550
Table legs	240	200
Finished Goods	20 tables	30 tables

               

Budgeted Sales for May, Year 18 are expected to be 2,000 tables. Selling prices are budgeted to be $600 per table.

For May Year 18, prepare a

Sales Budget.

Production Budget in units

Direct materials budget in units and in dollars

Manufacturing Labor Budget

Overhead Budget

Refer to A above, the company expects to have beginning cash of $150,000 on May 1, Year 18. In addition to the above expenditures, the company is expected to have the following expenses the income statement:

Selling Expenses                               24,000

Administrative Expenses                16,000

Depreciation                                        20,000

Prepare a cash budget for May Year 18

Answer 1

Solution:

Part 1 – Sales Budget

Sales Budget for May
Budgeted Sales Units (tables)	2000
Selling Price per table	$600
Budgeted Sales Revenue (1200*600)	$1,200,000

Part 2 – Production Budget in Units

Production Budget
Expected Sales Units	2,000
Plus: Desired Ending Inventory	30
Total Units needed	2030
Less: Expected Beginning Inventory	20
Production Requirements	2010

Part 3 – Direct materials budget in unit and in dollars

	Oak Tops	Table Legs	Total
Production requirements (number of tables)	2010	2010
Raw material required per table	48 feet	4 legs
Raw material required for production	96480	8040
Plus: Desired Ending Inventory	550	200
Total raw materials need	97030	8240
Less: Beginning Inventory	500	240
Raw material to be purchased	96530	8000
Cost per unit	$10.00	$5.00
Cost of purchases	$965,300	$40,000	$1,005,300

Part 4 – Manufacturing Labor Budget

Direct labor Cost budget
Units to be produced (from part 2)	2010
Required Direct Labor time per unit (3 hours and 24 minutes per table)	3.40
Total required direct labor time	6834
Direct labor rate per hour	$15
Total Direct labor cost	$102,510

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 remaining parts.