Problem - Jacobs manufactures two products: A and B. The firm predicts a sales volume of 10,000 units for Product A and ending finished goods inventory of 2,000 units. These numbers for Product B are 12,000 and 3,000, respectively. Jacobs currently has 7,000 units of A in inventory and 9,000 units of B.
The following raw materials are required to manufacture these products:
|
RM
|
Cost per pound
|
Required
Product A
|
Required
Product B
|
|
X
|
$2.00
|
2 pounds
|
zero
|
|
Y
|
$2.50
|
1 pound
|
1 pound
|
|
Z
|
$1.25
|
zero
|
3 pounds
|
Product A requires 3 hours of cutting time and two hours of finishing time; B requires one hour and three hours, respectively. The direct labor rate for cutting is $10 per hour and $18 per hour for finishing.
Required:
1. Prepare a production budget in units.
2. Prepare a materials usage budget in pounds and dollars.
3. Prepare a direct labor budget in hours and dollars for Product A.