Question
Kelly, Inc. manufactures inside banners that sell for $20 each. Each banner r equires 2 yards of lightweight canvas which costs $.60 per yard. Each
Kelly, Inc. manufactures inside banners that sell for $20 each. Each banner requires 2 yards of lightweight canvas which costs $.60 per yard. Each banner takes approximately 30 minutes to build, and the labor rate averages $8 per hour. Kelly has the following inventory policies:
Ending finished goods inventory should be 30% of next months sales.
Ending raw materials inventory should be 20% of next months production.
Expected banner sales for January -July are:
| February | 560 |
| March | 850 |
| April | 700 |
| May | 650 |
| June | 750 |
| July | 875 |
Variable manufacturing overhead is incurred at a rate of $.40 per unit produced. Annual fixed manufacturing overhead is estimated to be $9,000 ($750 per month) for expected production of 9,000 units for the year. Selling and administrative expenses are estimated at $820 per month plus $.75 per unit sold.
Please complete the following budgets for April and May:
| Sales Budget | April | May |
| Sales ( Units) |
|
|
| SP per unit | $20 | $20 |
| Budgeted Total Sales |
|
|
|
|
|
|
| Production Budget | April | May |
| Unit Sales |
|
|
| Plus: Ending Inventory |
|
|
| Less: Beginning Inventory | (210) |
|
| Budgeted Production |
|
|
| Raw Materials for Kites | April | May |
| Production |
|
|
| X Yards of Material per Unit | 2 | 2 |
| Total Yards Required for Production |
|
|
| Plus: Ending Inventory |
|
|
| Less: Beginning Inventory | (137) |
|
| Budgeted Purchases |
|
|
| X Cost per Yards of Material |
|
|
| Budgeted Cost of Material Purchased
|
|
|
|
|
|
|
| MOH Budget | April | May |
| Production in Units |
|
|
| X Variable OH rate |
|
|
| Budgeted Variable OH |
|
|
| Plus: Budgeted Fixed OH |
|
|
| Budgeted MOH Cost |
|
|
| Direct Labor Budget | April | May |
| Production in Units |
|
|
| Average DL hours per unit | .5 HOURS | .5 HOURS |
| Total DL hours required |
|
|
| Average Hourly Rate |
|
|
| Budgeted DL Cost |
|
|
| Budgeted Manufacturing Cost Per Unit | Cost Per Unit |
| Direct Materials |
|
| Total Direct Labor |
|
| Variable MOH |
|
| Fixed Manufacturing OH |
|
| Total Manufacturing Cost Per Unit |
|
| COGS Budget | April | May |
| Sales ( Units) |
|
|
| Budgeted Manufacturing Cost per Unit |
|
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| Budgeted Cost of Goods Sold |
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|
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| Selling & Admin Costs | April | May |
| Variable Selling and Administrative Rate($.75 per unit sold) |
|
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| Variable Selling and Administrative Expenses |
|
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| Fixed Selling and Administrative Expenses |
|
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| Budgeted Selling and Administrative Expenses |
|
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| Budgeted Income Statement | April | May |
| Budgeted Sales |
|
|
| Less: Cost of Goods Sold |
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| Budgeted Gross Margin |
|
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| Less: Budgeted Selling and Administrative Expenses |
|
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| Budgeted Net Operating Income |
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Financial Accounting Tools for Business Decision Making
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso
7th edition
978-1118344262, 111834426X, 1118162285, 978-1118562208, 1118562208, 978-1118162286
