Question

Business Decision Case The sales department of Donovan Manufacturing, Inc. has completed the following sales forccast for theRequired a. Prepare the sales budget for the quarter ended March 31, 20X1. b. Prepare the production budget for the quarter eSales budget For the Quarter Ended March 31, 20X1 Product Unit) Unit K Total sales revenue Forcasted sales volume Planned uniDirect materials budget For the Quarter Ended March 31, 20X1 Material A Material B Direct material required: Desired ending mManufacturing overhead budget For the Quarter Ended March 31, 20x1 Total direct labor hours Fixed manufacturing overhead costSchedule of cash collected from customers For the Quarter Ended March 31, 20X1 January February March Cash sales Credit sales

I think I have A & B correct but I'm so lost. The attached screenshots after the question are the templates I'm using. Any help is very appreciated.

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Answer #1

Solution (c): Direct Materials Budget

Workings:
For Production of Unit J
Total Units to be produced (as determined in solution(b)) 51000
Each unit of J, requires 3 pounds of 'A' and 2 pounds of 'B'
Therefore, Material A for Unit J (51000*2) 153000
Therefore, Material B for Unit J (51000*2) 102000
For Production of Unit K
Total Units to be produced (as determined in solution(b)) 31000
Each unit of K, requires 2 pounds of 'A' and 4 pounds of 'B'
Therefore, Material A for Unit J (31000*2) 62000
Therefore, Material B for Unit J (31000*4) 124000
Budget:
Direct materials required: Material A Material B
For Unit J 153000 102000
For Unit K 62000 124000
215000 226000
Desired Ending material inventory (given) 14000 8000
Total pound of material already available in the beginnig 19000 7000
Total pound of material to be purchased 210000 227000
Unit Purchase Price 9 5
Total Material Purchases 1890000 1135000

Solution (d): Direct Labour Budget

Direct labour hours required for production
Unit J (51000units * 0.5hrs per unit) 25500
Unit K (31000units * 1 hrs per unit) 31000
Total Direct Labour Hrs 56500
Labour cost per Hour 12
Total Direct Labour Cost 678000

Solution (e): Manufacturing overhead cost Budget

Total Direct Labour Hours (as determined in (d)) 56500
Manufacturing overhead cost per hour 6
Total variable Manufacturing overhead cost 339000
Total fixed Manufacturing overhead cost (given) 270000
(90000 is per month. Since budget is for 3 months (90000*3))
Total Manufacturing overhead cost 609000

Solution (f): Selling and admin expense budget

Total Sales Revenue (as determined in (a)) 6600000
Selling and admin expense cost % 10%
Total variable Selling and admin expense cost 660000
Total fixed Selling and admin expense cost (given) 540000
(180000 is per month. Since budget is for 3 months (180000*3))
Total Selling and admin expense cost 1200000

(as a rule only 4 sub questions can be answered. therefore, solution from (c) to (f) is provided)

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