Question

The company plans for finished goods inventory of 220 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 20% of next month’s production needs. Beginning direct materials inventory for April was 540 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.60 hours of direct labor at the rate of $12 per hour. The company budgets variable overhead at the rate of $16 per direct labor hour and budgets fixed overhead of $9,000 per month.
Required information Ramos Co. provides the following sales forecast and production budget for the next four months. Sales (units) Budgeted production (units) April 600 540 May 680 670 June 630 640 July 700 640 The company plans for finished goods inventory of 220 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 20% of next month's production needs. Beginning direct materials inventory for April was 540 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.60 hours of direct labor at the rate of $12 per hour. The company budgets variable overhead at the rate of $16 per direct labor hour and budgets fixed overhead of $9,000 per month. 1. Prepare a direct labor budget for April, May, and June. 2. Prepare a factory overhead budget for April, May, and June. Complete this question by entering your answers in the tabs below. Required 1 Required 2 Prepare a direct labor budget for April, May, and June. (Enter your direct labor hours (hrs.) per unit in two decimal places.) RAMOS CO. Direct Labor Budget For April, May, and June April May 540 June 640 units Budgeted production (units) 670 Total labor hours needed Budgeted direct labor cost Required 1 Required 2 >

Answer 1

Solution: Direct Labor Budget For April, May, and June. April May June Budgeted production (units) 540 670 640 units Labor requirements per unit (hours) 0.6 0.6 Total labor hours needed 324 402 384 Labor rate (per hour) L 12 12 12 Budgeted direct labor cost 3888 4824 4608 Factory Overhead Budget For April, May, and June. April May June Total labor hours needed 324 402 384 Variable factory overhead rate 16.0 16 16 Budgeted variable overhead 5184 6432 6144 Budgeted fixed overhead 9000 9000 9000 Budgeted total overhead 1418415432 15144