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Comprehensive Problem 6 (Algo) Skip to question [ The following information applies to the questions displayed below .] Utease Corporation has several production plants nationwide.
Comprehensive Problem 6 (Algo)
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[The following information applies to the questions displayed below.]
Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.
Manufacturing costs (per unit based on expected activity of 28,000 units or 56,000 direct labor hours):
Direct materials (3.0 pounds at $18) | $ | 54.00 | ||
Direct labor (2.0 hours at $80) | 160.00 | |||
Variable overhead (2.0 hours at $15) | 30.00 | |||
Fixed overhead (2.0 hours at $25) | 50.00 | |||
Standard cost per unit | $ | 294.00 | ||
Budgeted selling and administrative costs: | ||||
Variable | $ | 8 | per unit | |
Fixed | $ | 1,200,000 | ||
Expected sales activity: 24,000 units at $500 per unit
Desired ending inventories: 16% of sales
Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.
Units produced | 27,000 | |||
Units sold | 25,500 | |||
Unit selling price | $ | 495 | ||
Direct labor hours worked | 53,500 | |||
Direct labor costs | $ | 4,333,500 | ||
Direct materials purchased | 85,000 | pounds | ||
Direct materials costs | $ | 1,530,000 | ||
Direct materials used | 85,000 | pounds | ||
Actual fixed overhead | $ | 900,000 | ||
Actual variable overhead | $ | 740,000 | ||
Actual selling and administrative costs | $ | 1,892,000 | ||
In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.
Comprehensive Problem 6 (Algo) Part a
Required:
a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.
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