Demetri Products Inc. manufactures a product called XYZ. It requires two kilograms of material K102 and...
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Demetri Products Inc. manufactures a product called XYZ. It requires two kilograms of material K102 and 0.75 direct labour hours for each unit of product manufactured. The marketing department has forecast the following sales (in units) for each quarter of the coming year, 20X5: 1st quarter 2nd 4th quarter quarter 3rd quarter 10,000 9,000 Sales 11,000 13,000 The company has a policy of maintaining finished goods inventory at the end of each quarter equal to 10% of the following quarter' s sales. (The budgeted sales in the first quarter of 20X6 are 11,000 units.) At the start of 20X5, there were 1,000 units in finished goods with a total cost of $19,750. The cost of each kilogram of K102 is $1.50, and the direct labourers are paid $14 per hour. Variable manufacturing overhead is allocated to completed units at a rate of $6/direct labour hour, and fixed manufacturing overhead is budgeted at $20,000 per quarter and includes $5,000 of depreciation. Manufacturing overhead is allocated on the basis of budgeted direct labour hours. The production manager wants to maintain ending inventory of K102 at 25% of the following quarter' s production needs. The desired ending inventory for K102 for the fourth quarter is 5,550 kilograms. The beginning inventory of K102 was 5,050 kilograms (with a total cost of $7,575). The company plans to pay for 60% of raw materials purchases in the quarter in which they are acquired, with the remaining 40% to be paid in the following quarter. Direct labour, variable overhead and fixed overhead are paid for in the quarter in which they are incurred. The beginning accounts payable for materials purchases was $12,600. Required: Prepare the following budgets and schedules as part of the 20X5 master budget, by quarter and in total: a) Production budget b) Raw materials purchases budget c) Direct labour budget d) Manufacturing overhead budget (including predetermined overhead rate) e) Schedule of cash disbursements for manufacturing costs f) Ending finished goods inventory budget g) Cost of goods sold budget Demetri Products Inc. manufactures a product called XYZ. It requires two kilograms of material K102 and 0.75 direct labour hours for each unit of product manufactured. The marketing department has forecast the following sales (in units) for each quarter of the coming year, 20X5: 1st quarter 2nd 4th quarter quarter 3rd quarter 10,000 9,000 Sales 11,000 13,000 The company has a policy of maintaining finished goods inventory at the end of each quarter equal to 10% of the following quarter' s sales. (The budgeted sales in the first quarter of 20X6 are 11,000 units.) At the start of 20X5, there were 1,000 units in finished goods with a total cost of $19,750. The cost of each kilogram of K102 is $1.50, and the direct labourers are paid $14 per hour. Variable manufacturing overhead is allocated to completed units at a rate of $6/direct labour hour, and fixed manufacturing overhead is budgeted at $20,000 per quarter and includes $5,000 of depreciation. Manufacturing overhead is allocated on the basis of budgeted direct labour hours. The production manager wants to maintain ending inventory of K102 at 25% of the following quarter' s production needs. The desired ending inventory for K102 for the fourth quarter is 5,550 kilograms. The beginning inventory of K102 was 5,050 kilograms (with a total cost of $7,575). The company plans to pay for 60% of raw materials purchases in the quarter in which they are acquired, with the remaining 40% to be paid in the following quarter. Direct labour, variable overhead and fixed overhead are paid for in the quarter in which they are incurred. The beginning accounts payable for materials purchases was $12,600. Required: Prepare the following budgets and schedules as part of the 20X5 master budget, by quarter and in total: a) Production budget b) Raw materials purchases budget c) Direct labour budget d) Manufacturing overhead budget (including predetermined overhead rate) e) Schedule of cash disbursements for manufacturing costs f) Ending finished goods inventory budget g) Cost of goods sold budget
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Budget 1 Demetri Products Inc Production Budget For the Year ending 20X5 Quarter 1 Quarter 2 Quarter ... View the full answer
Related Book For
Business Statistics A First Course
ISBN: 978-0321979018
7th edition
Authors: David M. Levine, Kathryn A. Szabat, David F. Stephan
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