Sierra Furniture is an elite desk manufacturer It manufactures two
Sierra Furniture is an elite desk manufacturer. It manufactures two products:
◆ Executive desks: 0.91 m × 1.5 m oak desks = 1.365 m2
◆ Chairperson desks: 1.8 m × 1.2 m red oak desks = 2.16 m2
The budgeted direct cost inputs for each product in 2013 are as follows:
Unit data pertaining to the direct materials for March 2013 are as follows:
Unit cost data for direct cost inputs pertaining to February 2013 and March 2013 are:
Manufacturing overhead (both variable and fixed) is allocated to each desk based on budgeted direct manufacturing labour-hours per desk. The budgeted variable manufacturing overhead rate for March 2013 is $42 per direct manufacturing labour-hour. The budgeted fixed manufacturing overhead for March 2013 is $51,000. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods. Data relating to finished goods inventory for March 2013 are:
Budgeted sales for March 2013 are 740 units of the Executive Line and 390 units of the Chairperson Line. The budgeted selling prices per unit in March 2013 are $1,224 for an Executive Line desk and $1,920 for a Chairperson Line desk.
Assume the following in your answer:
a. Work-in-process inventories are negligible and ignored.
b. Direct materials inventory and finished goods inventory are costed using the FIFO method.
c. Unit costs of direct materials purchased and finished goods are constant in March 2013.
Prepare the following budgets for March 2013:
1. Revenue budget.
2. Production budget in units.
3. Direct materials usage budget and direct materials purchases budget.
4. Direct manufacturing labour budget.
5. Manufacturing overhead budget.
6. Ending inventory budget.
7. Cost of goods sold budget and gross margin calculation.
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