Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabat's budgeting department collected
Question:
Sabat Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2013, Sabat's budgeting department collected the following data to prepare the 2014 budgets:
2014 Projected Sales
Product | Units | Precio |
Thingone | 62,000 | $172 |
thing two | 46,000 | $264 |
2014 Inventories in Units
expected goal
Product | January 1st, 2014 | December 31, 2014 |
Thingone | 21,000 | 26,000 |
thing two | 13,000 | 14,000 |
The following direct materials are used in the two products:
Quantity used per unit
direct material | Unit | Thingone | thing two |
A | Libra | 5 | 6 |
B | Libra | 3 | 4 |
C | Each | 0 | 2 |
The projected data for 2014 for direct materials are:
direct material | advance purchase price | Expected Inventories January 1, 2014 | Target inventories December 31, 2014 |
A | $11 | 37,000 pounds | 40,000 pounds |
B | 6 | 32,000 pounds | 35,000 pounds |
C | 5 | 10,000 units | 12,000 units |
Projected direct manufacturing labor requirements and rates for 2014 are:
Product | hours per unit | hourly rate |
Thingone | 3 | $11 |
thing two | 4 | 14 |
Manufacturing overhead costs are allocated at the rate of $19 per direct manufacturing labor hour.
Based on the projections above and the budget requirements for Thingone and Thingtwo, prepare the following budgets for 2014:
Required
1. Revenue budget (in dollars)
2. What questions might the CEO ask the marketing manager when reviewing the budget for income? Briefly explain.
3. Production budget (in units)
4. Direct material purchases budget (in quantities)
5. Direct material purchases budget (in dollars)
6. Direct manufacturing labor budget (in dollars)
7. Budgeted finished goods inventory as of December 31, 2014 (in dollars)
8. What questions might the CEO ask the production manager when reviewing budgets for production, direct materials, and direct manufacturing labor?
9. How does preparing a budget help Sabat Corporation's top management to better manage the company?
Cost Accounting A Managerial Emphasis
ISBN: 978-0133428704
15th edition
Authors: Charles T. Horngren, Srikant M. Datar, Madhav V. Rajan