E22-25

Units to be the first three months of 2014 in units is: January 10,000; February 14,000; March 12,000. The company desires to have 10% of the next month's anticipated unit sales in inventory at the end of a month. December's ending inventory reflects this policy. April's sales are budgeted at 15,000 units. Prepare a production budget for Fawzi Production for February. Learnir 2nd Qtr. E22-25 Preparing an operating budget direct materials, direct labor, and manufacturing overhead budgets Trevor, Inc. manufactures model airplane kits and projects production at 500, 570, 300, and 450 kits for the next four quarters. Direct materials are $10 per kit. Indirect materials are considered insignificant and are not included in the budgeting process. Beginning Raw Materials Inventory is $200, and the company desires to end each quarter with 30% of the materials needed for the next quarter's production. Trevor desires a balance of $200 in Raw Materials Inventory at the end of the fourth quar- ter. Each kit requires 0.75 hours of direct labor at an average cost of $25 per hour. Manufacturing overhead is allocated using direct labor hours as the allocation base. Variable overhead is $0.75 per kit, and fixed overhead is $160 per quarter. Prepare Trevor's direct materials budget, direct labor budget, and manufacturing overhead budget for the year. Round the direct labor hours needed for production, budgeted overhead costs, and predetermined overhead allocation rate to two decimal places. Round other amounts to the nearest whole number. Lea E22-26 Preparing an operating budget Dory plans to produce 800,000 fizzy drinks during 2014, with 120,000 of them dur- ing the first quarter, 250,000 during the second quarter, 220,000 during the third nd 210 000 during the fourth quarter Employees are paid $13.50 per hour