Budgeting Concepts - Review Session
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The document presents a production budget for a company over 3 months (October, November, December). It includes budgets for sales, production quantities, materials, direct labor, and manufacturing overhead. Production is budgeted to be 10,100 units with required materials of 102,500 pounds. Direct labor is budgeted at 5,050 hours at $2 per hour, and manufacturing overhead is budgeted at $20,150 for the quarter.
Budgeting Concepts - Review Session
- 2. Sales Budget Ending Finished Goods Budget Production Budget Direct Direct Manufacturing Materials Labor Overhead Budget Budget Budget Selling and Cash Administrative Budget Budget
- 4. October November December Quarter Budgeted Sales in units 2000 5000 3000 10,000 Selling price per units $10 $10 $10 $10 Total budgeted Sales $20,000 $50,000 $30,000 $100,000
- 6. October November December Quarter Budgeted Sales in units 2000 5000 3000 10,000 Add: Desired ending inventory Total Needs Less: Beginning inventory Required production
- 7. October November December Quarter Budgeted Sales in units 2000 5000 3000 10,000 Add: Desired ending inventory 1000 Total Needs 3000 Less: Beginning inventory 400 Required production 2600 ? September 31 20% of November ending inventory Sales (5000)
- 8. October November December Quarter Budgeted Sales in units 2000 5000 3000 10,000 Add: Desired ending inventory 1000 600 Total Needs 3000 5600 Less: Beginning inventory 400 1000 Required production 2600 4600 20% of December Sales (3000)
- 9. October November December Quarter Budgeted Sales in units 2000 5000 3000 10,000 Add: Desired ending inventory 1000 600 500 500 Total Needs 3000 5600 3500 10,500 Less: Beginning inventory 400 1000 600 400 Required production 2600 4600 2900 10,100 20% of January Sales (2500)
- 11. October November December Quarter Production 2,600 4,600 2,900 10,100 Materials per unit (pounds) Production Needs Add: Desired ending inventory Total needed Less: Beginning inventory Materials to be purchased From production budget
- 12. October November December Quarter Production 2,600 4,600 2,900 10,100 Materials per unit (pounds) 10 10 10 10 Production Needs 26,000 46,000 29,000 101,000 Add: Desired ending inventory Total needed Less: Beginning inventory Materials to be purchased
- 13. October November December Quarter Production 2,600 4,600 2,900 10,100 Materials per unit (pounds) 10 10 10 10 Production Needs 26,000 46,000 29,000 101,000 Add: Desired ending inventory 4,600 Total needed 30,600 Less: Beginning inventory 2,000 Materials to be purchased 28,600 ? 10% of following month’s production needs
- 14. October November December Quarter Production 2,600 4,600 2,900 10,100 Materials per unit (pounds) 10 10 10 10 Production Needs 26,000 46,000 29,000 101,000 Add: Desired ending inventory 4,600 2,900 3500 3500 Total needed 30,600 48,900 32,500 104,500 Less: Beginning inventory 2,000 4,600 2,900 2000 Materials to be purchased 28,600 53,500 35,400 102,500
- 16. October November December Quarter Production 2,600 4,600 2,900 10,100 Direct labor per unit Total labor hours Hourly rate Total Direct labor cost
- 17. October November December Quarter Production 2,600 4,600 2,900 10,100 Direct labor per unit 0.5 0.5 0.5 0.5 Total labor hours 1,300 2,300 1,450 5,050 Hourly rate Total Direct labor cost
- 18. October November December Quarter Production 2,600 4,600 2,900 10,100 Direct labor per unit 0.5 0.5 0.5 0.5 Total labor hours 1,300 2,300 1,450 5,050 Hourly rate Total Direct labor cost
- 19. October November December Quarter Production 2,600 4,600 2,900 10,100 Direct labor per unit 0.5 0.5 0.5 0.5 Total labor hours 1,300 2,300 1,450 5,050 Hourly rate 2 2 2 2 Total Direct labor cost 2,600 4,600 2,900 10,100
- 21. October November December Quarter Budgeted DLH 1,300 2,300 1,450 5,050 Variable MOH rate Variable MOH costs Fixed MOH costs Total MOH costs Direct Labor Budget
- 22. October November December Quarter Budgeted DLH 1,300 2,300 1,450 5,050 Variable MOH rate 2 2 2 2 Variable MOH costs 2,600 4,600 2,900 10,100 Fixed MOH costs 3,350 3,350 3,350 10,050 Total MOH costs 5,950 7,950 6,250 20,150 Direct Labor Budget Total MOH for quarter $20,150 ≈ $4 per hour Total labor hours required 5,050
- 25. Total MOH for quarter $20,150 ≈ $4 per hour Total labor hours required 5,050
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