The Western Division of Keltic Company manufactures a vital component that is used in one of Keltic's major product lines. The Western Division has been experiencing some difficulty in coordinating activities among its various departments, which has resulted in some shortages of the component at critical times. To overcome the shortages, the manager of the Western Division has decided to initiate a monthly budgeting system that is integrated among departments. The first budget is to be for the second quarter of the current year. To assist in creating the budget, the divisional controller has accumulated the following information: Sales. Sales through the first three months of the current year were 48,000 units. Actual sales in units for January, February, and March, and planned sales in units over the next five months, are given below: January (actual) February (actual) March (actual) April (planned) May (planned) June (planned) July (planned) August (planned) 9,000 15,000 24,000 30,000 53,000 75,000 68,000 45,000 In total, the Western Division expects to produce and sell 380,000 units during the current year. Direct Materials. Two different materials are used in the production of the component. Data regarding these materials are given below: Direct Materials No. 226 No. 301 Units of Direct Materials per Finished Component 2 kilograms 5 metres $4.00 per kilogram $1.50 per meter Inventory at March 31 23,000 kilograms 35,000 metres Material No. 226 is sometimes in short supply. Therefore, the Western Division requires that enough of the material be on hand at the end of each month to provide for 60% of the following month's production needs. Material No. 301 is easier to obtain, so only 30% of the following month's production needs must be on hand at the end of each month. Direct Labour. The Western Division has three departments through which the components must pass before they are completed. Information relating to direct labour in these departments is given below: Department Cutting Assembly Finishing Direct Labour-Hours per Finished Component 0.15 0.60 0.10 Cost Per Direct Labour-Hour $16.00 $14.00 $18.00 Direct labour is adjusted to the workload each month. Manufacturing Overhead. The Western Division manufactured 48,000 components during the first three months of the current year. The actual variable overhead costs incurred during this three month period are shown below. The Western Division's controller Manufacturing Overhead. The Western Division manufactured 48,000 components during the first three months of the current year. The actual variable overhead costs incurred during this three month period are shown below. The Western Division's controller believes that the variable overhead costs incurred during the last nine months of the year will be at the same rate per component as experienced during the first three months. Utilities Indirect labour Supplies Other $ 63,000 34,000 18,000 9,800 Total variable overhead $124,800 The actual fixed manufacturing overhead costs incurred during the first three months totalled $1,287,000. The Western Division has budgeted fixed manufacturing overhead costs for the entire year as follows: Supervision Property taxes Depreciation Insurance Other $ 785,000 129,000 2,619,000 568,000 65,000 The actual fixed manufacturing overhead costs incurred during the first three months totalled $1,287,000. The Western Division has budgeted fixed manufacturing overhead costs for the entire year as follows: Supervision Property taxes Depreciation Insurance Other $ 785,000 129,000 2,619,000 568,000 65,000 Total fixed manufacturing overhead $4,166,000 Finished Goods Inventory. The desired monthly ending finished goods inventory is 20% of the next month's estimated sales. The Western Division has 6,000 units in finished goods inventory on March 31. Required: 1. Prepare a production budget for the Western Division for the second quarter ending June 30. Show computations by month and in total for the quarter. Production Budget April May June Quarter 2. Prepare a direct materials purchases budget for each type of material for the second quarter ending June 30. Again show computations by month and in total for the quarter. Direct Materials Purchases Budget April May June Quarter 69,200 114,800 147,200 331,200 Kgs. Kgs. Kgs. Kgs. 0 0 0 0 Material #226: Required productionunits Material #226 per unit Production needskilograms Add: Desired ending inventory Total needskilograms Less: Beginning inventory Required purchases-kilograms Required purchases at $4.00 per kilogram 88,320 76,080 76,080 88,320 0 68,880 68,880 23,000 45,880 115,080 88 68,880 19,440 134,240 75,992 0 1: 13,496 April May June Quarter mt. mt. mt. mt. Material #301: Required production-units Material #301 per unit Production needsmetres Add desired ending inventory Total needsmetres Less beginning inventory Required purchasesmetres Required purchases at $1.50 per metre 3. Prepare a direct labour budget for the second quarter ending June 30. This time it is not necessary to show monthly figures; show quarterly totals only. Assume that the workforce is adjusted as work requirements change. (Round "Per Unit" answers to 2 decimal places.) Direct Labour Hours 3. Prepare a direct labour budget for the second quarter ending June 30. This time it is not necessary to show monthly figures; show quarterly totals only. Assume that the workforce is adjusted as work requirements change. (Round "Per Unit" answers to 2 decimal places.) Direct Labour Hours Cost per Units Produced Per Unit Total Total Cost DLH Cutting Assembly Finishing Production needsmetres 4. Assume that the company plans to produce a total of 380,000 units for the year. Prepare a manufacturing overhead budget for the nine-month period ending December 31. (Do not compute a predetermined overhead rate.) Again, it is not necessary to show monthly figures. (Round Variable manufacturing overhead rate per unit to 2 decimal places.) 4. Assume that the company plans to produce a total of 380,000 units for the year. Prepare a manufacturing overhead budget for the nine-month period ending December 31. (Do not compute a predetermined overhead rate.) Again, it is not necessary to show monthly figures. (Round Variable manufacturing overhead rate per unit to 2 decimal places.) Expected production for the year Actual production through March 31 Expected production, April through December Variable manufacturing overhead rate per unit Variable manufacturing overhead Fixed manufacturing overhead Total manufacturing overhead Less depreciation Cash disbursement for manufacturing overhead $ 863,200