Preparing a manufacturing overhead budget

VMOH$=$$$\frac{3}{D}LH$

FMOH$=$$$1,\frac{000}{?}$ month

Preparing a selling and administrative budget

$$ Variable Selling Expense $=$$$0\mathrm{.}25/$unit

Fixed Selling Expense $=$$$6,480$

Fixed Administrative Expense $=$$$15,460$Preparing a sales budget

o Sales Forecast for Q$1$ in $20$XX: Selling price $=$ $$8$ per unit

$$ January $10,000$ units

$$ February $12,000$ units

$$ March $15,000$ units

$$ April $11,000$ units

Miles Manufacturing

Sales Budget

For the quarter ending March $31,20$XX

January February March

Sales $10,00012,00015,000$

Price $$8\mathrm{.}00$ $$8\mathrm{.}00$ $$8\mathrm{.}00$

Revenue $$80,000$ $$96,000$ $$120,000$

$2.$ Preparing a production budget

o Miles will begin the year with $14,000$ units in FG

o Miles wants to end each month with $140\%$ of the next month$$s projected sales in inventory

o Formulas:

Expected sales $+$ Desired EI $=$ Units Needed

Units Needed $$ Est. BI $=$ Units to produce

Miles Manufacturing

Production Budget

For the quarter ending March $31,20$XX

January February March

Expected sales $($units$)10,00012,00015,000$

Desired EI$*16,80021,00015,400$

Total units needed $26,80033,00030,400$

Less: Estimated BI$*14,00016,80021,000$

Units to be produced $12,80016,2009,400$

$*$EI $($Ending Inventory$),*$BI$($Beginning Inventory$)$

$3.$ Preparing a direct materials budget

o Each unit requires $3$ lbs$.$ of DM

o DM costs $$0\mathrm{.}60$ per lb$.$

o Miles will begin the year with $20,000$ lbs$.$ of DM$,$ but $30,000$ lbs$.$ at the end of January, $35,000$ at the end of February, and $40,000$ lbs$.$ at the end of March

o Formulas:

$($DM$/$unit $$ Units$)+$ Desired EI $=$ DM Needed

DM Needed $$ Estimated BI $=$ DM to Purchase

DM to Purchase $$ Cost$/$Unit $=$ Total DM Cost

Miles Manufacturing

Direct Materials Budget

For the quarter ending March $31,20$XX

January February March

Units to be produced $12,80016,2009,400$

DM per unit x$3$ x$3$ x$3$

DM for production $($lbs$.)38,40048,60028,200$

Desired EI $+30,000+35,000+40,000$

Total DM needed $68,40083,60068,200$

Estimated BI $-20,000-30,000-38,000$

DM to be bought $48,40053,60033,200$

DM cost per lb$.$ x$0\mathrm{.}60$ x$0\mathrm{.}60$ x$0\mathrm{.}60$

Total DM cost $29,04032,16019,920$

$4.$ Preparing a direct labor budget

o It takes $6$ minutes of DL to make one unit

o Workers earn $$10$ per hour

Miles Manufacturing

Direct Labor Budget

For the quarter ending March $31,20$XX

January February March

Units to be produced $12,80016,2009,400$

Production time x$0\mathrm{.}10$ DLH x$0\mathrm{.}10$ DLH x$0\mathrm{.}10$ DLH

Total DL hours $12\mathrm{.}80$ DLH $16\mathrm{.}20$ DLH $9\mathrm{.}40$ DLH

Hourly wage x$$10$ DLH x$$10$ DLH x$$10$ DLH

Total DL cost $12,80016,2009,400$

$5.$ Preparing a manufacturing overhead budget

o VMOH $=$ $$3/$DLH

o FMOH $=$ $$1,000/$month

Miles Manufacturing

Manufacturing Overhead Budget

For the quarter ending March $31,20$XX

January February March

Units to be produced

Production time

Total DL hours

Variable MOH$/$unit

Total variable MOH

Fixed MOH

Total MOH cost

$6.$ Preparing a selling and administrative budget

o Variable Selling Expense $=$ $$0\mathrm{.}25/$unit

o Fixed Selling Expense $=$ $$6,480$

o Fixed Administrative Expense $=$ $$15,460$

Miles Manufacturing

Selling and Administrative Budget

For the quarter ending March $31,20$XX

January February March

Sales in units

Variable. selling expense.$/$unit

Total variable selling expense

Fixed selling expense

Total selling expense

Admin. Expenses

Budgeted Operating Expenses