Question
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.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started