Factory Overhead Cost Budget

Sweet Tooth Company budgeted the following costs for anticipated production for August:

Advertising expenses	$269,350
Manufacturing supplies	14,760
Power and light	44,030
Sales commissions	294,310
Factory insurance	25,640
Production supervisor wages	129,500
Production control wages	33,670
Executive officer salaries	274,530
Materials management wages	37,030
Factory depreciation	20,980

Prepare a factory overhead cost budget, separating variable and fixed costs. Assume that factory insurance and depreciation are the only fixed factory costs.

Variable factory overhead costs:
Advertising expensesFactory depreciationFactory insuranceManufacturing suppliesSales commissions
Advertising expensesExecutive officer salariesFactory depreciationPower and lightSales commissions
Advertising expensesExecutive officer salariesFactory depreciationFactory insuranceProduction supervisor wages
Advertising expensesFactory depreciationFactory insuranceProduction control wagesSales commissions
Advertising expensesExecutive officer salariesFactory depreciationMaterials management wagesSales commissions
Total variable factory overhead costs
Fixed factory overhead costs:
Advertising expensesFactory insuranceManufacturing suppliesProduction supervisor wagesSales commissions
Advertising expensesExecutive officer salariesFactory depreciationPower and lightProduction supervisor wages
Total fixed factory overhead costs
Total factory overhead costs

Cost of Goods Sold Budget

Wilmington Chemical Company uses oil to produce two types of plastic products, P1 and P2. Wilmington budgeted 20,000 barrels of oil for purchase in June for $67 per barrel. Direct labor budgeted in the chemical process was $147,400 for June. Factory overhead was budgeted $241,200 during June. The inventories on June 1 were estimated to be:

Oil	$10,300
P1	6,900
P2	5,900
Work in process	8,500

The desired inventories on June 30 were:

Oil	$11,300
P1	6,300
P2	5,600
Work in process	8,800

Use the preceding information to prepare a cost of goods sold budget for June.

Cost of direct materials available for useDirect laborFactory overheadFinished goods inventory, June 1Total work in process during period
Direct laborFactory overheadWork in process inventory, June 1Work in process inventory, June 30Total work in process during period
Direct materials:
Cost of direct materials available for useDirect laborDirect materials inventory, June 1Direct materials inventory, June 30Total work in process during period
Cost of goods soldDirect laborDirect materials purchasesFinished goods inventory, June 30Total work in process during period
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal manufacturing costs
Less direct laborLess direct materials inventory, June 30Less factory overheadLess finished goods inventory, June 1Less total work in process during period
Cost of direct materials placed in productionCost of goods soldFinished goods inventory, June 1Finished goods inventory, June 30Work in process inventory, June 30
Cost of goods soldDirect laborTotal work in process during periodWork in process inventory, June 1Work in process inventory, June 30
Direct materials inventory, June 1Direct materials inventory, June 30Factory overheadTotal work in process during periodWork in process inventory, June 30
Cost of direct materials available for useCost of finished goods available for saleCost of goods soldCost of goods manufacturedTotal manufacturing costs
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period
Less direct laborLess direct materials inventory, June 30Less factory overheadLess finished goods inventory, June 1Less work in process inventory, June 30
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period
Less direct laborLess direct materials inventory, June 30Less factory overheadLess finished goods inventory, June 30Less work in process inventory, June 30
Cost of direct materials available for useCost of finished goods available for saleCost of goods manufacturedCost of goods soldTotal work in process during the period

Sales and Production Budgets

Sonic Inc. manufactures two models of speakers, Rumble and Thunder. Based on the following production and sales data for June, prepare (a) a sales budget and (b) a production budget:

	Rumble		Thunder
Estimated inventory (units), June 1	750		300
Desired inventory (units), June 30	500		250
Expected sales volume (units):
East Region	12,000		3,500
West Region	14,000		4,000
Unit sales price	$160		$200

Question Content Area

a. Prepare a sales budget.

Product and Area	Unit Sales Volume	Unit Selling Price	Total Sales
Model Rumble:
East Region
West Region
Total
Model Thunder:
East Region
West Region
Total
Total revenue from sales

Question Content Area

b. Prepare a production budget.

	Units Model Rumble	Units Model Thunder
Expected units to be sold
Less estimated inventory, June 1Plus desired inventory, June 30
Total units required
Less estimated inventory, June 1Plus desired inventory, June 30
Total units to be produced

Direct Materials Purchases Budget

Lorenzo's Frozen Pizza Inc. has determined from its production budget the following estimated production volumes for 12'' and 16'' frozen pizzas for September:

	Units
	12" Pizza	16" Pizza
Budgeted production volume	15,800		24,800

Three direct materials are used in producing the two types of pizza. The quantities of direct materials expected to be used for each pizza are as follows:

	12" Pizza	16" Pizza
Direct materials:
	Dough	0.80	lb. per unit	1.50	lb. per unit
	Tomato	0.50		0.70
	Cheese	0.70		1.30

In addition, Lorenzo's has determined the following information about each material:

	Dough	Tomato	Cheese
Estimated inventory, September 1	560	lb.	180	lb.	350	lb.
Desired inventory, September 30	590	lb.	170	lb.	380	lb.
Price per pound	$1.30		$2.50		$3.10

Prepare September's direct materials purchases budget for Lorenzo's Frozen Pizza Inc. When required, enter unit prices to the nearest cent.

	Dough	Tomato	Cheese	Total
Units required for production:
12" pizza
16" pizza
Less desired inventory, September 1Less desired inventory, September 30Plus desired inventory, September 1Plus desired inventory, September 30Plus estimated inventory, September 1Plus estimated inventory, September 30
Total pounds required
Less desired inventory, September 1Less desired inventory, September 30Less estimated inventory, September 1Less estimated inventory, September 30Plus estimated inventory, September 1Plus estimated inventory, September 30
Total units to be purchased
Unit price
Total direct materials to be purchased

Direct Labor Cost Budget

MatchPoint Racket Company manufactures two types of tennis rackets, the Junior and Pro Striker models. The production budget for March for the two rackets is as follows:

	Junior	Pro Striker
Production budget	6,100 units	20,400 units

Both rackets are produced in two departments, Forming and Assembly. The direct labor hours required for each racket are estimated as follows:

	Forming Department	Assembly Department
Junior	0.2 hour per unit	0.5 hour per unit
Pro Striker	0.3 hour per unit	0.65 hours per unit

The direct labor rate for each department is as follows:

Forming Department	$15 per hour
Assembly Department	$8 per hour

Prepare the direct labor cost budget for March.

	Forming Department	Assembly Department
Hours required for production:
Junior
Pro Striker
Total hours required
Hourly rate
Total direct labor cost