CD$9$ Current Designs

Diane Buswell is preparing the $2020$ budget for one of Creative Design's rotomolded kayaks. Extensive meetings with

members of the sales department and executive team have resulted in the following unit sales projections for $2020.$

Quarter $11,000$ kayaks

Quarter $21,500$ kayaks

Quarter $3750$ kayaks

Quarter $4750$ kayaks

Current Designs' policy is to have finished goods ending inventory in a quarter equal to $20\%$ of the next quarter's anticipated

sales. Preliminary sales projections for $2021$ are $1,100$ units for the first quarter and $1,500$ units for the second quarter. Ending

inventory of finished goods at December $31,2019,$ will be $200$ rotomolded kayaks.

Production of each kayak requires $54$ pounds of polyethylene powder and a finishing kit $($rope$,$ seat, hardware, etc.$).$ Company

policy is that the ending inventory of polyethylene powder should be $25\%$ of the amount needed for production in the next

quarter. Assume that the ending inventory of polyethylene powder on December $31,2019$ is $19,400$ pounds. The finishing kits

can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finished kits.

The polyethylene powder used in these kayaks cost $$1\mathrm{.}50$ per pound, and the finishing kits cost $$170$ each. Production of a

single kayak requires $2$ hours of time by more experienced, type I employees and $3$ hours of finishing time by type II employees.

The type I employees are paid $$15$ per hour, and the type II employees are paid $$12$ per hour.

Selling and administrative expenses for this line are expected to be $$45$ per unit sold plus $$7,500$ per quarter. Manufacturing

overhead is assigned at $150\%$ of labor costs.

Instructions

Prepare the production budget, direct materials budget, direct labor budget for this product line by quarter and in total for $2020.$

NOTE: Enter a number in cells requesting a value; enter either a number or a formula in cells with a $"?".$

Units to be produced value Value Value Value $?$

Number of hours of less skilled labor$/$unit x $3$ x $3$ x $3$ x $3$ x $3$

Total number of hours of less skilled labor $?????$

Hourly rate for less skilled labor x $$12$ x $$12$ x $$12$ x $$12$ x $$12$

Total cost of less skilled labor $?????$

Total cost for direct labor $?????$