Problem P1-1 Budgets in Managerial Accounting
Santiago's Salsa is in the process of preparing a production cost budget for May. Actual costs in April were:
		Santiago's Salsa
		Production Cost Budget
		April 2011
		Production - Jars of salsa			25,000
		Ingredient cost (variable)			$20,000
		Labor cost (variable)			12,000
		Rent (fixed)			5,000
		Depreciation (fixed)			6,000
		Other (fixed)			1,000
		Total			$44,000
Required:
Part a: Using this information, prepare a budget for May. Assume that production will increase to
30,000	jars of salsa, reflecting an anticipated sales increase related to a new marketing
campaign.
		Santiago's Salsa
		Production Cost Budget
		May 2011
		Production - Jars of salsa			30,000
		Ingredient cost (variable)			Amount
		Labor cost (variable)			Amount
		Rent (fixed)			Amount
		Depreciation (fixed)			Amount
		Other (fixed)			Amount
		Total			Formula
Part b.1: Does the budget suggest that additional workers are needed? Suppose the wage rate is
$20	per hour. How many additional labor hours are needed in May?
		Title				Number
		Title				Number
		Title				Number
		Title				Formula