Sales and Inventory Information, Finished Goods

Cat-allac

Dog-eriffic

Expected sales in units

530

265

Selling price

$

205

$

310

Target ending inventory in units

30

10

Beginning inventory in units

10

25

Beginning inventory in dollars

$

1,000

$

4,650

PetGear uses a FIFOcost-flow assumption forfinished-goods inventory.

Input Prices

Direct materials

Plastic

$

5

per pound

Metal

$

4

per pound

Direct manufacturing labor

$

10

per direct manufacturing labor hour

Input Quantities per Unit of Output

Cat-allac

Dog-eriffic

Direct materials

Plastic

4

pounds

6

pounds

Metal

0.5

pounds

1

pound

Direct manufacturing labor-hours (DMLH)

3

hours

5

hours

Machine-hours (MH)

11

MH

19

MH

Inventory Information, Direct Materials

Plastic

Metal

Beginning inventory

270

pounds

80

pounds

Target ending inventory

360

pounds

75

pounds

Cost of beginning inventory

$

999

$

256

Cost Driver Information

Cat-allac

Dog-errific

Number of units per batch

25

10

Setup time per batch

1.50

hours

2.00

hours

Inspection time per batch

0.5

hours

0.8

hour

Ifnecessary, round up to calculate number of batches.

Nonmanufacturing fixed costs for March equal $30,000, half of which are salaries. Salaries are expected to increase 5% in April. Other nonmanufacturing fixed costs will remain the same. The only variable nonmanufacturing cost is salescommission, equal to1% of sales revenue.

Requirement 1. Prepare the revenues budget.

Revenues Budget

For the Month of April

Units

Selling price

Total revenues

Cat-allac

530

$

205

$

108,650

Dog-eriffic

265

310

82,150

Total

$

190,800

Requirement 2. Prepare the production budget in units.

Production Budget (in Units)

For the Month of April

Cat-allac

Dog-eriffic

Budgeted units sales

530

265

Add target ending finished goods inventory

30

10

Total required units

560

275

Deduct beginning finished goods inventory

10

25

Units of finished goods to be produced

550

250

Requirement 3. Prepare the direct material usage budget and direct material purchases budget.

Begin with the physical unitsportion, then prepare the cost budget portion of the direct material usage budget.

Direct Material Usage Budget in Quantity and Dollars

For the Month of April

Material

Plastic

Metal

Total

Physical Units Budget

Direct materials required for

Cat-allac

lbs.

lbs.

Dog-errific

lbs.

lbs.

Total quantity of direct material to be used

lbs.

lbs.