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A B C F G H 1 Sales Budget 2 Jan. Feb. Mar Q1 3 Selling Price Per unit: $90.00 $90.00 $90.00 $90.00 4 Expected Sales: 20000 25000 30000 75000 5 Expected Revenues: $1,800,000.00 $2,250,000.00 $2,700,000.00 $6,750,000.00 6 7 Production Budget 0.7 8 Jan. Feb. Mar Q1 April 9 Expected Sales 20000 25000 30000 75000 30000 10 +Desired Ending Inventory 17500 21000 21000 21000 15400 11 Total # of valves Needed 37500 46000 51000 96000 45400 12 Less begning Inventory: 13000 17500 21000 21000 21000 13 Total # of valves to be produced 24500 28500 30000 75000 24400 14 15 DM Budget 5 6 16 Jan. Feb. Mar Q1 17 Unit produced 24500 28500 30000 75000 18 DM per Unit 30 30 30 30 19 Total DM cost 735000 855000 900000 225000020 21 Material Purchase Budget 0.5 22 Jan. Feb. Mar Q1 23 DM used in Production 735000 855000 900000 2250000 24 +Cost of Desired Inventory 427500 450000 1125000 1125000 25 -Cost of Beginning Inventory 300000 427500 450000 300000 26 Total Cost of material to be purch 862500 877500 1575000 3075000 27 28 Direct Labor Budget 29 Jan. Feb. Mar Q1 30 Production Unit: 24500 28500 30000 75000 31 DLH per unit: 2 2 2 2 32 DL Rate: 14 14 14 14 33 DL Cost 686000 798000 840000 2100000 24Electra Manufacturing, Inc., produces metal control valves used in the production of oil eld equipment. The control valves are sold to various gas and oil engineering companies through out the United States. Projected sales in units for the coming four months are as follows: January 20000 control valves February 25000 control valves March 30000 control valves April 30000 control valves May 22000 control valves Thefollowing data pertain to production policies and manufacturing specications followed by Electra: a. Finished goods inventory on January 1 is 13,000 units. The desired ending inventory for each month is 70 percent ofthe next month's sales. b. The data on material used are as follows: for every valve 6 pounds of metal are used. One pound of metal costs $5. RM inventory on January 1 includes 60,000 pounds ofmetal. The desired ending RM inventory for each month dictates that sufcient materials are on hand to produce 50 percent of next month's estimated production. c. The direct labor used to make one valve is two hours. The average direct labor cost per hour is $14. d. Overhead each month is estimated as follows (variable costs are per unit produced): Fixed Cost Component Variable Cost Component Supplies $ - $1.00 Power ~ 1.1 Maintenance 28,000 2.1 Supervision 14,000 ~ Depreciation 100,000 ~ Taxes 7,000 ,_ Other 56,000 3.6 23 24 25 26 21| 23 29 30 31 32 33 34 35 36 37 3a 39 4o 41 42 43 44 45 45 cl. Overhead each month is estimated as follows (variable costs are per unit produced): Supplies Power Maintenance Supervision Depreciation Taxes Other e. Monthly selling and administrative expenses are estimated as follows (variable costs are per unit sold): Salaries Commissions Depredaon Shipping Other Fixed Cost Compone Variable Cost Component 5 -- $1.00 .. 1.1 23,000 2.1 14,000 .. 100,000 7,000 -- 56,000 3.6 Fixed Cost Compons Variable Cost Component $30,000 $0.75 5,000 -- 10,000 0.4 f. The unit selling price of the control valve is $90. g. lnMarch, the company plans to purchase land for future expansion. The land costs $90,000