Question

Condor Corporation manufactures two different types of coils used in electric motors. In the fall of the current year, the controller compiled the following data. • Sales forecast for 20x3 (all units to be shipped in 20x3): Product Units Price Light coil 56,000 $ 260 Heavy coil 36,000 360 • Raw-material prices and inventory levels: Raw Material Expected Inventories January 1, 20x3 Desired Inventories, December 31, 20x3 Anticipated Purchase Price Sheet metal 34,000 lb. 38,000 lb. $ 15 Copper wire 31,000 lb. 34,000 lb. 8 Platform 5,600 units 6,600 units 4 • Use of raw material: Amount Used per Unit Raw Material Light Coil Heavy Coil Sheet metal 5 lb. 6 lb. Copper wire 3 lb. 4 lb. Platform 2 unit • Direct-labor requirements and rates: Product Hours per Unit Rate per Hour Light coil 3 $ 15 Heavy coil 5 20 • Finished-goods inventories (in units): Product Expected January 1, 20x3 Desired December 31, 20x3 Light coil 21,000 26,000 Heavy coil 8,500 9,500 • Production overhead: Overhead Cost Item Activity-Based Budget Rate Purchasing and material handling $ 0.60 per pound of sheet metal and copper wire purchased Depreciation, utilities, and inspection $ 5.00 per coil produced (either type) Shipping $ 1.00 per coil shipped (either type) General production overhead $ 3.00 per direct-labor hour 1. Prepare the sales budget (in dollars) for 20x3. 2. Prepare the production budget (in units) for 20x3. 3. Prepare the raw material purchases budget (in quantities) for 20x3. 4. Prepare the raw material purchases budget (in dollars) for 20x3.

Answer 1

Req 1: Sales budget
			LIGHT COIL	HEAVY COIL
Expected sales unit			56000	36000
Selling price per unit			260	360
Budgeted Sales in $			14,560,000	12,960,000
Req: Production Budget
			LIGHT COIL	HEAVY COIL
Expected sales unit			56,000	36,000
Add: Desired ending Inventory			26000	9500
Less: Beginning Inventory			21000	8500
Production in Units			61000	37000
Req 3: Raw material Purchase budget in units
				Sheet Metal	Copper Wire	Platform
Total requirement:
Sheet Metal (61,000 units@5 +37,000@6)				527000
Copper wire (61,000@3+37,000@4)					331000
Platform (37,000 units@2)						74000
Add: Desired ending inventory				38000	34000	6600
Less: Beginning Inventory				34000	31000	5600
Budgeted Purchases in Units				531,000	334,000	75,000
Req 4: Raw material purchase budget in $
				Sheet Metal	Copper Wire	Platform
Budgeted Purchases in Units				531,000	334,000	75,000
Budgeted Purchase price per unit				15	8	4
Budgeted Purchase in $				7,965,000	2,672,000	300,000