Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Budgetary Planning Project Managerial accountants and the budget committee for the FMI corporation is meeting in November to prepare the 2019 budget. Your task, as

Budgetary Planning Project

Managerial accountants and the budget committee for the FMI corporation is meeting in November to prepare the 2019 budget. Your task, as a member of the budget committee, is to prepare the 2019 budget given the following data:

Sales: The company expects to sell 40% more units in 2019 than in each quarter of 2018. During 2018, sales were Q1: 40,000; Q2: 30,000; Q3: 60,000 and Q4: 50,000 units. The selling price per unit is expected to be $50 in the first three quarters, but only $40 per unit in Q4 because substantial competition is expected beginning in Q4 of 2019. Sales are expected to be 40,000 units in Q1 of 2020.

The company wants to maintain ending finished goods inventory at 25% of the next quarters expected unit sales. Assume that this will hold to start Q1 of 2019 so that beginning finished goods inventory is (.25) (40,000 x 1.4) = (.25)(56,000) =14,000 units.

Each unit of final goods produced requires 1.5 hours of direct labor time at $12 per hour.

Variable overhead costs are calculated per unit of direct labor hours as follows: indirect labor $0.2, indirect materials $0.1, maintenance $0.5.

ANNUAL fixed overhead costs are: supervisory salaries $200,000, maintenance $60,000, depreciation $80,000. They are allocated equally across quarters.

Direct raw material requirements are 5 kilograms per unit of output produced and the cost is $1.5 per kilogram of materials. At the end of each quarter, the company maintains enough raw materials to produce 10,000 units for the next quarter.

Instructions:

Prepare the following budgets by quarter for the year 2019 (also show the cumulative or annual totals):

[Use the format shown in the textbook/slides to prepare each quarters budget. Your work and calculations MUST be done using a Microsoft excel spreadsheet].

  1. Sales budget
  2. Production budget
  3. Direct materials budget
  4. Direct labor budget
  5. Manufacturing overhead budget

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial Accounting A User Perspective

Authors: Robert E. Hoskin, Maureen R. Fizzell, Donald C. Cherry

4th Canadian Edition

0470834455, 978-0470834459

More Books

Students also viewed these Accounting questions