Sales, Production, Direct Materials, Direct Labor, and Factory Overhead Budgets

Commonwealth Tire Cos budgeted unit sales for the year were:

Passenger-car tires 60,000

Truck tires 12,500

The budgeted selling price for truck tires was $350 per tire and that for passenger-car tires was

$100 per tire. The beginning finished goods inventories were expected to be 2,500 truck tires

and 6,000 passenger tires, for a total cost of $400,510, with the desired ending inventories at

2,000 and 5,000, respectively, and a total cost of $326,478. There was no anticipated beginning

or ending work-in-process inventory for either type of tire.

The standard materials quantities for each type of tire were as follows:

Truck Passenger Car

Rubber 35 lb 15 lb

Steel belts .. 4.5 lb 2.0 lb

The purchase prices of rubber and steel were $3 and $2 per pound, respectively. The desired

ending inventories for rubber and steel were 60,000 and 6,000 lb, respectively. The estimated

beginning inventories for rubber and steel were 75,000 and 7,500 lb, respectively. The direct

labor hours required for each type of tire were as follows:

Molding Department Finishing Department

Truck tire . 0.20 0.10

Passenger car tire . 0.10 0.05

The direct labor rate for each department is as follows:

Molding Department . $13 per hour

Finishing Department .. $15 per hour

Budgeted factory overhead costs were as follows:

Indirect materials . $170,560

Indirect labor .. 158,800

Depreciation of building and equipment 98,320

Power and light 126,000

Total $553,680

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Required:

Prepare each of the following budgets for Moto for the year ended December 31

1. Sales Budget

2. Production budget

3. Direct material budget

4. Direct labor budget