Yount Company has budgeted the following unit sales:
2009
January
February
March
April
May
Units
10,000
8,000
9,000
11,000
15,000
The finished goods units on hand on December 31, 2008, was 1,000 units. Each unit requires
2 pounds (Weight) of raw materials that are estimated to cost an average of $4 per pound. It
is the company's policy to maintain a finished goods inventory at the end of each month equal
to 10% of next month's anticipated sales. They also have a policy of maintaining a raw
materials inventory at the end of each month equal to 20% of the pounds needed for the
following month's production. There were 3,920 pounds of raw materials on hand at December
31, 2008.
Each unit requires 1.5 hours of direct labor. Wage rate is $11 per hour.
Instructions
For the first quarter of 2009, prepare (1) a production budget and (2) a direct materials
budget (3)direct labor budget.
(1)
YOUNT COMPANY
Production Budget
For the Quarter Ended March 31, 2009
Expected unit sales
Add: Desired ending finished goods
units
Total required units
Less: Beginning finished goods
units
Required production units
January
10,000
8000x10%=
800
10,800
(1000)
February
8000
900
March
9000
1100
April
11000
1500
8900
(800)
10,100
(900)
12500
(1100)
9800
8100
9200
11400
(2)
YOUNT COMPANY
Direct Materials Budget
For the Quarter Ended March 31, 2009
January
February
Units to be produced (Required
9800
8100
Production Units )
Direct materials per unit
X2
X2
Total DM needed for production
19600
16200
Add Desired ending direct materials 16200X20%=
3680
(pounds)
3240
Total materials required
22840
19880
Less: Beginning direct materials
(3920)
(3240)
(pounds)
Direct materials purchases(Pounds)
18920
16640
Cost per pound
X4
X4
Total cost of direct materials
75680
66560
purchases (Income Statement)
March
9200
X2
18400
4560
11400
X2
22800
22960
3680
19280
X4
77120
219360
**April units: 11,400 × 2 = 22,800 ×
20%.
(3)
YOUNT COMPANY
Direct Labor Budget
For the Quarter Ended March 31, 2009
Units to be produced (Production
Budget)
Direct labor time (hours) per unit
Total required direct labor hours
Direct labor cost per hour
Total direct labor cost (Income
Statement)
January
9800
February
8100
March
9200
x 1.5
14700
X11
161700
X1.5
12150
X11
133650
X1.5
13800
X11
151800
Total
447150
MOH = Manfac Cost= Indirect Material, Indirect LABOUR, Variable cost Deperciation
(Plant and Equipment), Factory Maint, Insurance (Relevant Fixed Assets)
MOH Fixed AND Variable
Neeley Company combines its operating expenses for budget purposes in a selling and
administrative expense budget. For the first quarter of 2008, the following data are developed:
1. Sales: 20,000 units; unit selling price:
2. Variable costs per dollar of sales:
Sales commissions
Delivery expense
Advertising
3. Fixed costs per quarter:
Sales salaries
Office salaries
Depreciation
Insurance
Property taxes
$35
6%
2%
4%
$24,000
17,000
6,000
2,000
1,000
Instructions
Prepare a selling and administrative expense budget for the first quarter of 2008.
NEELEY COMPANY
Selling and Administrative Expense Budget
For the Quarter Ended March 31, 2008
January
Variable Costs
Feb
March
Indirect Material
(Sales ) or
Production Unit
Indirect Labour
(Sales) or
Production Unit
Total Variable
Cost
Fixed Cost
Total Cost