Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin

Laghari Company makes and sells high-quality glare filters for microcomputer monitors. John Tanaka, controller, is responsible for preparing Laghari's master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer's share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company's union contract calls for an increase in direct labor wages that is included in the direct labor rate. Laghari expects to have 6,300 glare filters in inventory on December 31 of the current year, and has a policy of carrying 25 percent of the following month's projected sales in inventory. Information on the first four months of the coming year is as follows:

JanuaryFebruaryMarchAprilEstimated unit sales35,80035,60040,20039,800Sales price per unit$80$80$75$75Direct labor hours per unit2.902.902.602.60Direct labor hourly rate$17$17$18$18Direct materials cost per unit$10$10$10$10

Required: Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.

1. Prepare the following monthly budgets for Laghari Company for the first quarter of the coming year.

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a. Production budget in units:

JanuaryFebruaryMarchTotalUnit salesfill in the blank 38dbf004703200b_1fill in the blank 38dbf004703200b_2fill in the blank 38dbf004703200b_3fill in the blank 38dbf004703200b_4Desired ending inventoryfill in the blank 38dbf004703200b_5fill in the blank 38dbf004703200b_6fill in the blank 38dbf004703200b_7fill in the blank 38dbf004703200b_8Total units requiredfill in the blank 38dbf004703200b_9fill in the blank 38dbf004703200b_10fill in the blank 38dbf004703200b_11fill in the blank 38dbf004703200b_12Less: Beginning inventoryfill in the blank 38dbf004703200b_13fill in the blank 38dbf004703200b_14fill in the blank 38dbf004703200b_15fill in the blank 38dbf004703200b_16Units producedfill in the blank 38dbf004703200b_17fill in the blank 38dbf004703200b_18fill in the blank 38dbf004703200b_19fill in the blank 38dbf004703200b_20

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To prepare the production budget consider units sales, desired ending inventory, and beginning inventory.

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b. Direct labor budget in hours: Round your answers to two decimal places, if required.

JanuaryFebruaryMarchTotalUnits producedfill in the blank bcd7440a506f06b_1fill in the blank bcd7440a506f06b_2fill in the blank bcd7440a506f06b_3fill in the blank bcd7440a506f06b_4Direct labor hours per unitfill in the blank bcd7440a506f06b_5fill in the blank bcd7440a506f06b_6fill in the blank bcd7440a506f06b_7Total labor budget (hours)fill in the blank bcd7440a506f06b_8fill in the blank bcd7440a506f06b_9fill in the blank bcd7440a506f06b_10fill in the blank bcd7440a506f06b_11

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To prepare the direct labor budget multiply units to be produced by direct labor time per unit. Then multiply by wages per hour.

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c. Direct materials cost budget:

JanuaryFebruaryMarchTotalUnits producedfill in the blank 75164bfe6fd1f94_1fill in the blank 75164bfe6fd1f94_2fill in the blank 75164bfe6fd1f94_3fill in the blank 75164bfe6fd1f94_4Cost per unit$fill in the blank 75164bfe6fd1f94_5$fill in the blank 75164bfe6fd1f94_6$fill in the blank 75164bfe6fd1f94_7$fill in the blank 75164bfe6fd1f94_8Total direct materials$fill in the blank 75164bfe6fd1f94_9$fill in the blank 75164bfe6fd1f94_10$fill in the blank 75164bfe6fd1f94_11$fill in the blank 75164bfe6fd1f94_12

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To prepare the direct materials purchases budget: multiply units produced by direct materials per unit to determine production needs; consider desired ending inventory; consider beginning inventory; multiply direct materials to purchase by cost per unit.

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d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.

JanuaryFebruaryMarchTotalUnit salesfill in the blank 8c5e6c05afb5053_1fill in the blank 8c5e6c05afb5053_2fill in the blank 8c5e6c05afb5053_3fill in the blank 8c5e6c05afb5053_4Unit selling price$fill in the blank 8c5e6c05afb5053_5$fill in the blank 8c5e6c05afb5053_6$fill in the blank 8c5e6c05afb5053_7$fill in the blank 8c5e6c05afb5053_8Total sales revenue$fill in the blank 8c5e6c05afb5053_9$fill in the blank 8c5e6c05afb5053_10$fill in the blank 8c5e6c05afb5053_11$fill in the blank 8c5e6c05afb5053_12

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To prepare the sales budget multiply units by unit selling price.

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2. Calculate the total budgeted contribution margin for Laghari Company by month and in total for the first quarter of the coming year. (CMA adapted)

JanuaryFebruaryMarchTotalSales revenue$fill in the blank 708d7c07003efad_1$fill in the blank 708d7c07003efad_2$fill in the blank 708d7c07003efad_3$fill in the blank 708d7c07003efad_4Direct labor costfill in the blank 708d7c07003efad_5fill in the blank 708d7c07003efad_6fill in the blank 708d7c07003efad_7fill in the blank 708d7c07003efad_8Materials costfill in the blank 708d7c07003efad_9fill in the blank 708d7c07003efad_10fill in the blank 708d7c07003efad_11fill in the blank 708d7c07003efad_12Contribution margin$fill in the blank 708d7c07003efad_13$fill in the blank 708d7c07003efad_14$fill in the blank 708d7c07003efad_15$fill in the blank 708d7c07003efad_16