Question

Course: Management and Cost Accounting

Chapter: Budgets

Best Woods Co. is a desk manufacturer. It makes two products, the 'Executive desks' and the 'Chairman desks'. The budgeted information for each product for April 2018 is as follows:

Standard material and labour costs:

                                                                                                            $

Oak top (per square foot)                                                                   20                               

Red oak top (per square foot)                                                            25

Oak legs (per leg)                                                                               12

Red oak legs (per leg)                                                                        18

Manufacturing labour cost per hour                                                    30       

The standard material and labour usage for each product is as follows:

                                                                       Executive desk                       Chairman desk

Oak top                                                          16 square feet                         -

Red oak top                                                   -                                              25 square feet

Oak legs                                                         4                                             -

Red oak legs                                                  -                                              4

Direct manufacturing labour                          3 hours                                   5 hours

Other relevant data is as follows for April 2018:

Direct material beginning inventory:

                                                                       Executive desk                       Chairman desk

Oak top (square feet)                                     320                                         -

Red oak top (square feet)                              -                                              150

Oak legs                                                         100                                         -

Red oak legs                                                  -                                              40

Direct materials ending inventory:

                                                                       Executive desk                       Chairman desk

Oak top (square feet)                                     192                                         -

Red oak top (square feet)                              -                                              200

Oak legs                                                         80                                           -

Red oak legs                                                  -                                              44

Finished goods inventory:

                                                                       Executive desk                       Chairman desk

Beginning inventory in units                           20                                           5

Ending inventory in units                              30                                           15

Manufacturing overhead (fixed and variable) is allocated to each desk on the basis of budgeted direct manufacturing labour hours. The budgeted variable manufacturing overhead rate for April 2018 is $35 per direct manufacturing labour hour. The budgeted fixed manufacturing overhead for April 2018 is $42,500.

Budgeted sales for April 2018 are 740 units of the Executive desks and 390 units of the Chairman desks. The budgeted selling prices per unit in April 2018 are $1,020 for the Executive desk and $1,600 for the Chairman desk.

Required:                                          ALL CALCULATIONS MUST BE SHOWN

Prepare the functional budgets for April 2018 as follows:

(a)   Direct manufacturing labour budget         

                                                    

(b)   Manufacturing overhead budget.

Note: Show also the calculation of the fixed manufacturing overhead cost per hour and total manufacturing overhead cost per hour.   

Note:

Hello! If you are not sure how to fulfill all the requirements needed, please do not attempt the question.

Your help is very much appreciated. Thank you.

Answer 1

(a)   Direct manufacturing labour budget
			Executive desk	Chairman desk	TOTAL
	A	Direct manufacturing labor hour per unit	3	5
	B	Manufacturing labor cost per hour	$30	$30
	C=A*B	Direct labor cost per unit	$90	$150
		Direct Manufacturing Labor Budget -April 2018
	D	Budgeted Sales in units	740	390
	E	Ending Inventory inunits	30	15
	F	Beginning Inventory in units	20	5
	G=D+E-F	Production in units	750	400
	H	Direct manufacturing labor cost per unit	$90	$150
	I=G*H	Budgeted Direct manufacturing labor cost	$67,500	$60,000	$127,500
	J	Direct manufacturing labor hour per unit	3	5
	K=G*J	Budgeted Direct manufacturing labor hour	2250	2000	4250
	(b)   Manufacturing overhead budget.
	A	Budgeted Direct manufacturing labor hour	4250
	B	Budgeted variable manufacturing overhead rate	$35	per direct manufacturing labor hour
	C=A*B	Budgeted variable manufacturing Overhead	$148,750
	D	Budgeted Fixed manufacturing Overhead	$42,500
	E=C+D	Total budgeted manufacturing overhead	$191,250
	F=D/A	Fixed manufacturing overhead cost per hour	$10
	G=E/A	total manufacturing overhead cost per hour.	$45