1) Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Dockers and 501 Jeans. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Dockers and 501 Jeans shows estimated sales of 24,690 and 56,600 pairs, respectively, for May. The finished goods inventory is assumed as follows:

	Dockers		501 Jeans
May 1 estimated inventory	1,100		1,600
May 31 desired inventory	410		2,000

Assume the following direct labor data per 10 pairs of Dockers and 501 Jeans for four different sewing operations:

	Direct Labor per 10 Pairs
	Dockers		501 Jeans
Inseam	21	minutes	14	minutes
Outerseam	25		17
Pockets	8		10
Zipper	12		7
Total	66	minutes	48	minutes

a. Prepare a production budget for May. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Two-Leg Company
Production Budget
For Month Ending May 31 (assumed data)
	Dockers	501 Jeans
Expected units to be sold
May 31 desired inventory
Total units available
May 1 estimated inventory
Total units to be produced

Feedback

Remember to take into account expected units to be sold, desired units in ending inventory and estimated units in beginning inventory when calculating total units to be produced.

Learning Objective 4.

b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $9 wage per hour for the inseam and outerseam sewing operations and a $19 wage per hour for the pocket and zipper sewing operations.

Two-Leg Company
Direct Labor Cost Budget
For Month Ending May 31 (assumed data)
	Inseam	Outerseam	Pockets	Zipper	Total
Dockers
501 Jeans
Total minutes
Total direct labor hours
Direct labor rate	x $	x $	x $	x $
Total direct labor cost	$	$	$	$	$

2) Delaware Chemical Company uses oil to produce two types of plastic products, P1 and P2. Delaware budgeted 25,200 barrels of oil for purchase in June for $58 per barrel. Direct labor budgeted in the chemical process was $160,800 for June. Factory overhead was budgeted at $263,100 during June. The inventories on June 1 were estimated to be:

Oil	$11,300
P1	7,600
P2	6,400
Work in process	9,300

The desired inventories on June 30 were:

Oil	$12,400
P1	6,900
P2	6,100
Work in process	9,600

Use the preceding information to prepare a cost of goods sold budget for June. For those boxes in which you must enter subtracted or negative numbers use a minus sign.

Delaware Chemical Company
Cost of Goods Sold Budget
For the Month Ending June 30
Finished goods inventory, June 1			$
Work in process inventory, June 1		$
Direct materials:
Direct materials inventory, June 1	$
Direct materials purchases
Cost of direct materials available for use	$
Direct materials inventory, June 30
Cost of direct materials placed in production	$
Direct labor
Factory overhead
Total manufacturing costs
Total work in process during the period		$
Work in process inventory, June 30
Cost of goods manufactured
Cost of finished goods available for sale			$
Finished goods inventory, June 30			$
Cost of goods sold			$

3) OfficeMart Inc. has "cash and carry" customers and credit customers. OfficeMart estimates that 20% of monthly sales are to cash customers, while the remaining sales are to credit customers. Of the credit customers, 25% pay their accounts in the month of sale, while the remaining 75% pay their accounts in the month following the month of sale. Projected sales for the next three months are as follows:

October	$111,000
November	139,000
December	203,000

The Accounts Receivable balance on September 30 was $74,000.

Prepare a schedule of cash collections from sales for October, November, and December. Round all calculations to the nearest whole dollar.

OfficeMart Inc.
Schedule of Collections from Sales
For the Three Months Ending December 31
	October	November	December
Receipts from cash sales:
Cash sales	$	$	$
September sales on account:
Collected in October
October sales on account:
Collected in October
Collected in November
November sales on account:
Collected in November
Collected in December
December sales on account:
Collected in December
Total cash receipts	$	$	$