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Mattison manufactures two products: A and B. The company predicts a sales volume of 20,000 units for product A and desired ending finished-goods inventory of

Mattison manufactures two products: A and B. The company predicts a sales volume of 20,000 units for product A and desired ending finished-goods inventory of 1,000 units. These numbers for product B are 25,000 and 3,000, respectively. Mattison currently has 7,000 units of A in inventory and 9,000 units of B. The unit selling price for A and B are $250 and $200 respectively. The following raw materials are required to manufacture these products:

Raw Material

Cost Per Pound

Required for Product A

Required for Product B

Desired ending direct materials

Beginning direct materials

X

$2.00

3 pounds

1 pound

1,800

5,000

Y

$4.50

2 pound

5 pounds

1,200

7,000

Product A requires 4 hours of labor; B requires 3 hours. The direct labor rate is $12 per hour.

An accounting assistant has prepared the detailed production overhead budget and the selling and administrative budget. The production overhead budget shows:

Variable cost of $2 per unit produced for both products

Fixed cost of $40,000 for product A and $50,000 for product B

Production overhead is applied on the basis of direct labor.

The selling and administrative budget shows:

Variable cost of $3 per unit sold for both products

Fixed cost of $50,000 for product A and $70,000 for product B

Prepare a production budget in units for product A and B.

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