Sweden makes two products: Premium cabinets - large cabinets with mirrors De Luxe cabinets - medium sized cabinets with an innovative shelving solution Direct manufacturing labour is 3 hours for the premium cabinet and 5 hours for the De Luxe. The budgeted direct material usage for each product in 2018 is:

Square metres Premium De Luxe

Mirrors 2 0

Softwood 1 5

Hardwood 4 1

Balsa wood 1 4

Opening direct materials inventory for September 2018 is:

Square metres Premium De Luxe

Mirrors 40 0

Softwood 10 30

Hardwood 100 5

Balsa wood 4 40

Target ending direct materials inventory (September 30) is:

Square metres Premium De Luxe

Mirrors 24 0

Softwood 6 40

Hardwood 80 4

Balsa wood 4 44

Unit cost data is expected to be the same for September as it was in August for labour and all materials except Balsa Wood where a change in supplier has resulted in a cost increase of 50%. Detailed cost data is as follows:

August (actual) September (budgeted)

Mirrors per square metre 160 160

Softwood per square metre 125 125

Hardwood per square metre 12 12

Balsa wood per square metre 16 24

Manufacturing labour cost per hour 30 30

Manufacturing overhead (both variable and fixed) is allocated to each cabinet on the basis of budgeted direct manufacturing labour hours. The budgeted variable manufacturing overhead rate for September 2018 is $35 per direct manufacturing labour-hour

The budgeted fixed manufacturing overhead for the month is $42,500. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods on the basis of direct manufacturing labour-hours

Data relating to finished goods inventory for September 2018 are:

Premium De Luxe

Opening Inventory (units) 20 5

Opening Inventory (dollars) $10,840 $4,850

Target Ending Inventory 30 15

Budgeted sales for September 2018 are 740 units of the premium and 390 units of the De Luxe. The budgeted selling prices per unit in September 2018 are $1,020 for the Premium and $1,600 for the De Luxe.

Assume the following:

Work-in-process inventories are negligible and ignored.

Direct materials inventory and finished goods inventory are costed using the FIFO method.

Unit costs of direct materials purchased and finished goods are constant in September 2018.

how do we approach to prepare Budgets for September 2018:

Revenues budget and Production budget in units

Direct materials usage budget and direct materials purchases budget (both budgets in units and $)

Direct manufacturing labour budget and Manufacturing overhead budget

Ending inventories budget (direct materials and finished goods) and Cost of goods sold budget

For each budget, we need to highlight by product (Premium and De Luxe) and in total