Allison Manufacturing produces a subassembly used in the

production of jet aircraft engines. The assembly is sold to

engine manufacturers and aircraft maintenance facilities.

Projected sales in units for the coming $5$ months follow:

January $40,000$

February $60,000$

March $80,000$

April $80,000$

May $72,000$

The following data pertain to production policies and manufacturing

specifications followed by Allison Manufacturing:

a$.$ Finished goods inventory on January $1$ is $32,000$ units, each costing

$$166\mathrm{.}06.$ The desired ending inventory for each month is $80\%$ of the

next month's sales.

b$.$ The data on materials used are as follows:

Direct Material $|$ Per Unit Usage $|$ DM Unit Cost

Metal $10$ lbs$.$ $$8$

Components $65$

Inventory policy dictates that sufficient materials be on hand at the end

of the month to produce $50\%$ of the next month's production needs. This

is exactly the amount of material on hand on December $31$ of the prior

year.

c$.$ The direct labor used per unit of output is $3$ hours. The average direct

labor cost per hour is $$14\mathrm{.}25.$

d$.$ Overhead each month is estimated using a flexible budget formula.

$($Note: Activity is measured in direct labor hours.$)$

Fixed$-$Cost

Component

Variable$-$

Cost

Component

Supplies $$ $$1\mathrm{.}00$

Power $0\mathrm{.}50$

Maintenance $$30,0000\mathrm{.}40$

Supervision $16,000$

Depreciation $200,000$c$.$

Allison Manufacturing

Direct Materials Purchases Budget $($Schedule $3)$

For the Quarter Ended March $31$

Units to be produced $($Sch$.2)$

$$ Direct materials per unit

Production needs

Desired ending inventory

Total needs

Less: Beginning inventory

Direct materials to be purchased

$$ Cost per unit

Total cost

d$.$

Allison Manufacturing

Direct Labor Budget $($Schedule $4)$

For the Quarter Ended March $31$

Taxes $12,000$

Other $80,0000\mathrm{.}50$