Question:
XYZ, Inc. This company manufactures picture frames that sell for $20 each. Each frame needs 4 linear feet of bamboo, which costs $1.50 per foot. Every frame takes approximately .50 minutes to build, and the labor rate averages $10.00 per hour.
XYZ has the subsequnt inventory policies:
Ending finished goods inventory should be 40 % of the next month's sales.
Ending raw materials inventory should be 30 % of the next month's production.
Expected unit sales (frames) for the upcoming months follow:
March 275
April 250
May 300
June 400
July 375
August 425
Variable manufacturing overhead is incurred at a rate of $.25 per unit produced. Annual fixed manufacturing overhead is computed to be $7,200 ($600 per month) for an expected production of 4,000 units for the year. Administrative and Selling expenses are estimated at $650 per month plus $.60 per unit sold.
Requirement: 1 Sales Budget
April May June 2nd Quarter
Budgeted Sales (units)
Unit Sales Price
Budgeted sales revenue
Requirement: 2 Production Budget
April May June 2nd Quarter
Budgeted Sales (units)
Ending finished goods inventory
Beginning finished goods inventory
Budgeted production
Requirement: 3 Raw Materials purchase budget
April May June 2nd Quarter
Budget production
Material Requirements per unit
Total Material needed for production
Ending Raw Materials inventory
Beginning raw materials inventory
Budgeted Raw Materials Purchases
Material Cost per foot
Budgeted cost of raw material purchases
Requirement: 4 Direct Labor Budget
April May June 2nd Quarter
Budgeted Production
Direct labor requirements per unit
Direct Labor Hours Required
Direct Labor Rate
Budgeted direct labor cost
Requirement 5: Manufacturing overhead cost budget
April May June 2nd Quarter
Budgeted Production
Variable manufacturing overhead rate
Budgeted Variable manufacturing
Fixed Manufacturing overhead
Budgeted Manufacturing overhead