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:

	January	February	March	April
Estimated unit sales	35,800	35,600	40,200	39,800
Sales price per unit	$80	$80	$75	$75
Direct labor hours per unit	2.90	2.90	2.60	2.60
Direct labor hourly rate	$17	$17	$18	$18
Direct 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.

Question Content Area

a. Production budget in units:

	January	February	March	Total
Unit sales	fill in the blank 38dbf004703200b_1	fill in the blank 38dbf004703200b_2	fill in the blank 38dbf004703200b_3	fill in the blank 38dbf004703200b_4
Desired ending inventory	fill in the blank 38dbf004703200b_5	fill in the blank 38dbf004703200b_6	fill in the blank 38dbf004703200b_7	fill in the blank 38dbf004703200b_8
Total units required	fill in the blank 38dbf004703200b_9	fill in the blank 38dbf004703200b_10	fill in the blank 38dbf004703200b_11	fill in the blank 38dbf004703200b_12
Less: Beginning inventory	fill in the blank 38dbf004703200b_13	fill in the blank 38dbf004703200b_14	fill in the blank 38dbf004703200b_15	fill in the blank 38dbf004703200b_16
Units produced	fill in the blank 38dbf004703200b_17	fill in the blank 38dbf004703200b_18	fill in the blank 38dbf004703200b_19	fill in the blank 38dbf004703200b_20

Feedback Area

Feedback

Question Content Area

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

	January	February	March	Total
Units produced	fill in the blank bcd7440a506f06b_1	fill in the blank bcd7440a506f06b_2	fill in the blank bcd7440a506f06b_3	fill in the blank bcd7440a506f06b_4
Direct labor hours per unit	fill in the blank bcd7440a506f06b_5	fill in the blank bcd7440a506f06b_6	fill in the blank bcd7440a506f06b_7
Total labor budget (hours)	fill in the blank bcd7440a506f06b_8	fill in the blank bcd7440a506f06b_9	fill in the blank bcd7440a506f06b_10	fill in the blank bcd7440a506f06b_11

Feedback Area

Feedback

Question Content Area

c. Direct materials cost budget:

	January	February	March	Total
Units produced	fill in the blank 75164bfe6fd1f94_1	fill in the blank 75164bfe6fd1f94_2	fill in the blank 75164bfe6fd1f94_3	fill in the blank 75164bfe6fd1f94_4
Cost 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_8
Total 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

Feedback Area

Feedback

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.

Question Content Area

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

	January	February	March	Total
Unit sales	fill in the blank 8c5e6c05afb5053_1	fill in the blank 8c5e6c05afb5053_2	fill in the blank 8c5e6c05afb5053_3	fill in the blank 8c5e6c05afb5053_4
Unit 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_8
Total 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

Feedback Area

Feedback

Question Content Area

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)

	January	February	March	Total
Sales revenue	$fill in the blank 708d7c07003efad_1	$fill in the blank 708d7c07003efad_2	$fill in the blank 708d7c07003efad_3	$fill in the blank 708d7c07003efad_4
Direct labor cost	fill in the blank 708d7c07003efad_5	fill in the blank 708d7c07003efad_6	fill in the blank 708d7c07003efad_7	fill in the blank 708d7c07003efad_8
Materials cost	fill in the blank 708d7c07003efad_9	fill in the blank 708d7c07003efad_10	fill in the blank 708d7c07003efad_11	fill in the blank 708d7c07003efad_12
Contribution 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