Question

Wesley power tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw for $60. Wesley expects the following unit sales:

January: 5200

February: 5400

March: 5900

April: 5700

May: 5100

Wesley's ending finished goods inventory policy is 20% over the next month sales. Suppose each handsaw takes approximately .75 hours to manufacture, and Wesley pays an average labor wage of $22 per hour.

Each handsaw requires a plastic housing that Wesley purchases from my supplier at a cost of $7 each. The company has an ending raw materials inventory policy of 20% of the following months production requirements. Materials other than the housing unit total of $4.50 per handisaw.

manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units). and $1.20 per unit variable manufacturing overhead. Wesley selling expenses are 7% of sales dollars, and administrative expenses are fixed at $18,000 per month.

required:

1. Compute the following for the first quarter:

-budgeted sales revenue for January, February, March and first quarter total

-budgeted production in units for January, February, March, and first quarter total

-budgeted cost of raw material purchases for the plastic housings for January, February, March, and first quarter total

-budgeted direct labor cost for January, February, March, and first quarter total

Answer 1

SALES BUDGET
			Jan	Feb	March	Quarter
Budgeted Sales units		5,200	5,400	5,900	16,500
Selling price per unit		60	60	60	60
Total Sales		3,12,000	3,24,000	3,54,000	9,90,000
PRODUCTION BUDGET
			Jan	Feb	March	Quarter		April
Budgeted Sales Units		5,200	5,400	5,900	16,500		5,700
Add: Desired Ending Finished inventory	1,080	1,180	1,140	1,140		1020
Total Needs		6,280	6,580	7,040	17,640		6,720
Less: Beginning Finished Inventory	1,040	1,080	1,180	1,040		1,140
Required Production in units	5,240	5,500	5,860	16,600		5,580
RAW MATERIAL PURCHASE BUDGET
			Jan	Feb	March	Quarter
Budgeted Production units	5,240	5,500	5,860	16,600
RM required per unit		1	1	1	1
Total RM requiremnt		5,240	5,500	5,860	16,600
Add: Desired Ending Inventory	1,100	1,172	1,116	1,116
Total needs		6,340	6,672	6,976	17,716
Less: Beginning Inventory	1,048	1,100	1,172	1,048
Purchase Units		5,292	5,572	5,804	16,668
Cost price per unit		7.00	7.00	7.00	7.00
Budgeted Purchase in $	37,044	39,004	40,628	1,16,676
LABOUR COST BUDGETS
			Jan	Feb	March	Quarter
Units to be produced		5,240	5,500	5,860	16,600
Labour required per unit	0.75	0.75	0.75	0.75
Labour hours		3930	4125	4395	12450
Labuor Rate per hour	22	22	22	22
Budgeted Labour cost in $	86,460	90,750	96,690	2,73,900