Question

the sequence is reversed

Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct manufacturing labor-hours per blanket. The budgeted variable manufacturing overhead rate for March 2017 is $16 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2017 is $14,640. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods. Data relating to finished goods inventory for March 2017 are as follows: Raiders Blanket Beginning inventory in units Beginning inventory in dollars (cost) Target ending inventory in units Knights Blanket 12 $1,440 22 $2,550 27 Budgeted sales for March 2017 are 130 units of the Knights blankets and 190 units of the Raiders blankets. The budgeted selling prices per unit in March 2014 are $229 for the Knights blankets and $296 for the Raiders blankets. Assume the following in your answer: • Work-in-process inventories are negligible and ignored. • Direct materials inventory and finished goods inventory are costed using the FIFO method. • Unit costs of direct materials purchased and finished goods are constant in March 2017 1. Prepare the following budgets for March 2017: a. Revenues budget b. Production budget in units c. Direct material usage budget and direct material purchases budget d. Direct manufacturing labor budget e. Manufacturing overhead budget f. Ending inventories budget (direct materials and finished goods) 9. Cost of goods sold budget 2. Suppose Lame Specialties decides to incorporate continuous improvement into its budgeting process Describe two areas where it could incorporate continuous improvement into the budget schedules in requirement 1.

Answer 1

A. REVENUE BUDGET KNIGHTS BLANKET RAIDER BLANKET 130 229 29,770 PARTICULARS SALES BUDGETED SELLING PRICE PER UNIT SALE VALUE 190 296 56,240 B. PRODUCTION BUDGET ( IN UNITS) KNIGHTS BLANKET 130 22 152 12 RAIDER BLANKET PARTICULARS SALES CLOSING STOCK SUB-TOTAL OPENING STOCK BUDGTED PRODUCTION 190 27 217 ADD: LESS: 17 200 140 C. DIRECT MATERIAL USAGE & PURCHASE BUDGET BLACK WOOL RAIDER KNIGHT LOGO LOGO PATCHESPATCHES RED WOOL PARTICULARS BASIS FABRIC FABRIC DIRECT MATERIAL REQUIRED PER UNIT OF FINISHED PRODUCT UNIT 4 BUDGTED PRODUCTION * BUDGETED RAW MATERIALDIRECT USAGE (A) 200 560 1000 140 MATERIAL REQUIRED PER UNIT UNIT UNIT UNIT CLOSING STOCK (B) SUB-TOTAL {C= A+B) OPENING STOCK (D) BUDGTED PURCHASE { E= C-D} 25 585 35 25 25 165 25 1025 225 15 45 60 UNIT 1010 120 550 165 D. DIRECT MANUFACTURING LABOUR BUDGET KNIGHTS BLANKET RAIDER BLANKET PARTICULARS BASIS DIRECT LABOUR HOURS REQUIRED PER UNIT OF FINISHED PRODUCT HRS 3 4. BUDGTED PRODUCTION * BUDGETED DIRECT MANUFACTURING LABOUR DIRECT LABOUR 420 HOURS 800 HOUR REQUIRED PER UNIT E. MANUFACTURING OVERHEAD BUDGET KNIGHTS BLANKET RAIDER BLANKET PARTICULARS BASIS VARIABLE OVERHEAD RATE PER LABOUR HOUR 16 16 BUDGTED LABOUR HOURS * VARIABLE OVERHEAD RATE PER LABOUR HOUR BUDGETED VARIABLE OVERHEAD 6720 12800 FIXED OVERHEAD ( APPORTIONED IN RATIO OF DIRECT LABOUR HOURS) 42:80 5040 9600 F. ENDING DIRECT MATERIALS BUDGET (BASED ON FIFO METHOD) KNIGHT I RAIDER BLACK RED WOOL BASIS PARTICULARS WOOL LOGO LOGO FABRIC PATCHESPATCHES FABRIC OPENING STOCK (A) OPENING STOCK/UNIT (B) OPENING STOCK (C} = A*B BUDGTED PURCHASE (D) BUDGTED PURCHASE/UNIT KE} BUDGTED PURCHASE (F) = D*E MATERIAL CONSUMED (G) MATERIAL CONSUMED (I) = J+K OUT OF OPENING STOCK (J) OUT OF CURRENT PERIOD PURCHASE (K) CLOSING STOCK CLOSING STOCK {L} = C+F-I$ GIVEN (UNIT) GIVEN ($) 35 15 60 45 12 180 1010 315 550 315 120 360 165 GIVEN (UNIT) GIVEN ($) 10 11 I$ 5500 560 840 140 1320 11110 GIVEN (UNIT) 1000 200 I$ 980 5565 11015 1480 35*9 15*12 45*7 60*6 525*10 985*11 25 250 95*7 140*8 25 200 GIVEN ( UNIT) 25 25 175 275 F& G. ENDING FINISHED GOODS BUDGET (BASED ON FIFO METHOD) & COST OF GOODS SOLD KNIGHTS BLANKET RAIDER BLANKET 12 PARTICULARS BASIS GIVEN ( UNIT) OPENING STOCK (A) OPENING STOCK/UNIT (B) C/A OPENING STOCK {C} BUDGETED PRODUCTION (D) = G+K-A BUDGETED PRODUCTION {E} = F/D BUDGETED PRODUCTION WORKING NOTE (F) SALE (G) COST OF GOODS SOLD (H) -I+J OUT OF OPENING STOCK (1) OUT OF CURRENT PERIOD PURCHASE (J) CLOSING STOCK (K) CLOSING STOCK {L} = C+F- BALANCING 17 CALCULATED ($) 150 120 GIVEN ($) BALANCING FIGURE ( UNIT) 2550 1440 140 200 CALCULATED ($) 212 282 29645 130 ( IN $) GIVEN (UNIT) 56495 190 49,035 25,119 17*150 12*120 173*282 118*2 GIVEN ( UNIT) 22 27 FIGURE ( $) 5,967 10,010 WORING NOTE (1) - COST OF GOODS MANUFACTURED RAIDER BLANKET 6545 KNIGHTS BLANKET BASIS MATERIAL 12495 5565 - RED WOOL FABRIC -BLACK WOOL FABRIC - KNIGHT LOGO PATCHES - RAIDER LOGO PATCHES 11015 CALCULATED IN SUB-PARTS ABOVE ($) 980 1480 21600 800 27 LABOUR LABOUR HOURS TAKEN LABOUR COST/HR 11340 420 HRS GIVEN ($) 27 OVERHEAD VARIABLE 11760 6720 5040 22400 12800 HRS GIVEN ($) FIXED 9600 TOTAL 29645 56495