Question 1: Calculate raw materials purchagec in dollars
Rensing Ltd. estimates sales for the second quarter of 2017 will be as follows.
|
Month
|
Units
|
|
April
|
2,550
|
|
May
|
2,675
|
|
June
|
2,390
|
The target ending inventory of finished products is as follows.
|
March 31
|
2,000
|
|
April 30
|
2,230
|
|
May 31
|
2,200
|
|
June 30
|
2,310
|
Two units of material are required for each unit of finished product. Production for July is estimated at 2,700 units to start building inventory for the fall sales period. Rensing's policy is to have an inventory of raw materials at the end of each month equal to 50% of the following month's production requirements.
Raw materials are expected to cost $4 per unit throughout the period.
Instructions
Calculate the May raw materials purchases in dollars.
Question 2: Prepare a production and a direct materials budget
Fuqua Company's sales budget projects unit sales of part 198Z of 10,000 units in January 12,000 units in February, and 13,000 units in March. Each unit of part 198Z requires 4 pounds of materials, which cost $2 per pound. Fuqua Company desires its end¬ing raw materials inventory to equal 40% of the next month's production requirements, and its ending finished goods inventory to equal 20% of the next month's expected unit sales. These goals were met at December 31, 2016.
Instructions
(a) Prepare a production budget for January and February 2017.
(b) Prepare a direct materials budget for January 2017.
Question 3: Prepare a direct labor budget.
Rodriguez, Inc., is preparing its direct labor budget for 2017 from the following production budget based on a calendar year.
| Quarter |
Units
|
Quarter |
Units |
| 1 |
20,000
|
3 |
35,000
|
| 2 |
25,000
|
4 |
30,000
|
Each unit requires 1.5 hours of direct labor.
Instructions
Prepare a direct labor budget for 2017. Wage rates are expected to be $16 for the first 2 quarters and $18 for quarters 3 and 4.
Question 4: Prepare a manufacturing overhead budget for the year.
Atlanta Company is preparing its manufacturing overhead budget for 2017. Relevant data consist of the following.
Units to be produced (by quarters): 10,000, 12,000, 14,000, 16,000. Direct labor: time is 1.5 hours per unit.
Variable overhead costs per direct labor hour: indirect materials $0.80; indirect labor $1.20; and maintenance $0.50.
Fixed overhead costs per quarter: supervisory salaries $35,000; depreciation $15,000; and maintenance $12,000.
Instructions
Prepare the manufacturing overhead budget for the year, showing quarterly data.
Question 5: Prepare a selling and administrative expense budget for 2 quarters.
Kirkland Company combines its operating expenses for budget purposes in a sell¬ing and administrative expense budget. For the first 6 months of 2017, the following data are available.
1. Sales: 20,000 units quarter 1; 22,000 units quarter 2.
2. Variable costs per dollar of sales: sales commissions 5%, delivery expense 2%, and advertising 3%.
3. Fixed costs per quarter: sales salaries $12,000, office salaries $8,000, depreciation $4,200, insurance $1,500, utilities $800, and repairs expense $500.
4. Unit selling price: $20.
Instructions
Prepare a selling and administrative expense budget by quarters for the first 6 months of 2017.