The direct labor budget is simpler than the production or purchases budgets because there is no...
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The direct labor budget is simpler than the production or purchases budgets because there is no beginning or ending inventory of labor. As a result, the labor budget is simply the budgeted units produced times the number of direct labor hours per unit. This can be expressed in dullars by multiplying the total hours needed times the wage rate. Suppose that a comparny budgeted monthly production in the first quarter of 9,600, 12,100, and 13,050 units. Each unit takes 15 minutes of direct labor time and the average wage rate is $18 per hour. Prepare a direct labor budget by month and in total for the first quarter of the year. (Round your DLH per urit to twa decimal places and round total direct labor hours to the nearest hour.) January February March Total Units to produce 9,600 12,100 13,050 34,750 x Direct labor hours per unit Total direct labor hours x Wage rate Direct labor cost The overhead budget is very similar to the direct labor budget. It can be as simple as a list of overhead costs, or it can separate variable from fixed overhead. Ir variable overhead is based on direct labor hours, then the overhead budget will be done after the direct labor budget is complete. Suppose that a company budgeted monthly direct labor hours in the first quarter of 2,400 hours, 3,025 hours, and 3,263 hours. The variable overhead rate is $3.20 per direct labar hour. Fixed overhead is $3,800 per month. Prepare an overhead budget for the first quarter of the year by month and in total. (Round overhead rate to two decimal places and round all dollar armounts to the nearest dollar.) January February March Total Total direct labor hours x Variable overhead rate Budgeted variable overhead + Budgeted fixed overhead Total budgeted overtead The Operating Budgets: Marketing and Administrative Expense Budgets The marketing expense budget can be prepared in much the same way as the overhead budget. That is, variable expenses and fixed expenses are budgeted and then totaled. Suppose that a company has variable marketing expense consisting of a sales commission equal to 5% of sales revenue. Sales revenue for the first three months of the quarter equals $560,000, $580,000, and $600,000. Fixed marketing expense consists of the following monthly costs: depreciation $3,500, salaries $12,000, and advertising $5,000. Prepare a marketing expense budget for the first quarter, by month and in total. January February March Total Budgeted sales revenue x Sales commission rate Budgeted variable marketing expense Fixed marketing expense: Depreciation Salaries Advertising Budgeted fixed marketing expense Totai budgeted marketing expense The administrative budget is typically a listing of line item adrninistrative costs and the expected amounts. Administrative costs do not vary with units produced or sold, nor with direct labor hours, so they are strictly fixed. Suppose a company has the following administrative expenses per month: salaries $21,000, depreciation $8,500, insurance $2,400, and training $1,000. Prepare an administrative expense budget for the first quarter, by month and in total, January February March Total Salaries Depreciation Insurance Training Totai budgeted administrative expense The direct labor budget is simpler than the production or purchases budgets because there is no beginning or ending inventory of labor. As a result, the labor budget is simply the budgeted units produced times the number of direct labor hours per unit. This can be expressed in dullars by multiplying the total hours needed times the wage rate. Suppose that a comparny budgeted monthly production in the first quarter of 9,600, 12,100, and 13,050 units. Each unit takes 15 minutes of direct labor time and the average wage rate is $18 per hour. Prepare a direct labor budget by month and in total for the first quarter of the year. (Round your DLH per urit to twa decimal places and round total direct labor hours to the nearest hour.) January February March Total Units to produce 9,600 12,100 13,050 34,750 x Direct labor hours per unit Total direct labor hours x Wage rate Direct labor cost The overhead budget is very similar to the direct labor budget. It can be as simple as a list of overhead costs, or it can separate variable from fixed overhead. Ir variable overhead is based on direct labor hours, then the overhead budget will be done after the direct labor budget is complete. Suppose that a company budgeted monthly direct labor hours in the first quarter of 2,400 hours, 3,025 hours, and 3,263 hours. The variable overhead rate is $3.20 per direct labar hour. Fixed overhead is $3,800 per month. Prepare an overhead budget for the first quarter of the year by month and in total. (Round overhead rate to two decimal places and round all dollar armounts to the nearest dollar.) January February March Total Total direct labor hours x Variable overhead rate Budgeted variable overhead + Budgeted fixed overhead Total budgeted overtead The Operating Budgets: Marketing and Administrative Expense Budgets The marketing expense budget can be prepared in much the same way as the overhead budget. That is, variable expenses and fixed expenses are budgeted and then totaled. Suppose that a company has variable marketing expense consisting of a sales commission equal to 5% of sales revenue. Sales revenue for the first three months of the quarter equals $560,000, $580,000, and $600,000. Fixed marketing expense consists of the following monthly costs: depreciation $3,500, salaries $12,000, and advertising $5,000. Prepare a marketing expense budget for the first quarter, by month and in total. January February March Total Budgeted sales revenue x Sales commission rate Budgeted variable marketing expense Fixed marketing expense: Depreciation Salaries Advertising Budgeted fixed marketing expense Totai budgeted marketing expense The administrative budget is typically a listing of line item adrninistrative costs and the expected amounts. Administrative costs do not vary with units produced or sold, nor with direct labor hours, so they are strictly fixed. Suppose a company has the following administrative expenses per month: salaries $21,000, depreciation $8,500, insurance $2,400, and training $1,000. Prepare an administrative expense budget for the first quarter, by month and in total, January February March Total Salaries Depreciation Insurance Training Totai budgeted administrative expense
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Required Answer Budgets Sales budget Yes cash budget No Marketing expense Yes Direct labor budget Yes Administrative expense budget Yes Production budget Yes Direct material purchases budget Yes Endin... View the full answer
Related Book For
Fundamental Accounting Principles
ISBN: 978-0078110870
20th Edition
Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta
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