Question

Problems Group A P7-39A Preparing an operating budget-ales, production, direct maserals, 157 Learning Objective 3 labor, overhead, COGS, and S&A expense budgets The Huber Batting Company manufacrures wood baseball bats. Hube's two primary products are a youth bat.designed for children and young teDA, and 3. POHR S8 4, Adult bats COGS $60.690 adult bat, designed for high school and college-aged players. Huber sells he be wmb Sale sporting goods stores, and all sales are on account. The youth bat sellsor 5 adult bat sells for $65) Huber's highest sales volume is in the first thee monhs o the year as retailers prepare for the spring baseball season. Huber's balance shem December 31, 2016, follows HUBER BATTING COMPANY Balance Sheet December 31, 2016 Assets Cument Assets S 15,000 Cash 21,600 Accounts Receivable 12,000 Raw Materials Inventory 17,210 Finished Goods Inventory s 65,810 Total Current Assets Property, Plant, and Equipment Equipment 115,000 (20,000) 95,000 $ 160.810 Less: Accumulated Depreciation Total Assets Liabilities Current Liabilites $ 10,500 Accounts Payable Stockholders' Equity Common Stock, no par $130,000 Retained Earnings 20,310 Total Stockholders' Equity 150,310 Total Liabilities and Stockholders Equity $ 160,810 Other data for Huber Batting Company for the first quarter of 2017: a. Budgeted siles are 1,300 youth bats and 3,100 adult bats. b. Finished Goods Inventory on December 31 consists of 650 youth bats at $17 each and 440 adult bats at $14 each. c. Desired ending Finished Goods Inventory is 100 youth bats and 550 adult bats FIFO inventory costing method is used. d. Direct materials cost is $7 per youth bat and $9 per adult bat. e. Desired ending Raw Materials Inventory is $12,000 (indirect materials are insignificant and not considered for budgeting purposes).

Answer 1

1	Sales budget:
						Youth	Adult	Total
	Budgeted sales in bats				a	1300	3100	4400
	Selling price				b	35	65
	Budgeted sales in $				a*b	45500	201500	247000
2	Production Budget:
						Youth	Adult	Total
	Budgeted sales in bats					1300	3100	4400
	Add: Desired ending finished goods inventory					100	550	650
	Total bats required					1400	3650	5050
	Less:Beginning finished goods inventory					650	440	1090
	Bats to be produced					750	3210	3960
3	Direct materials budget:
						Youth	Adult	Total
	Bats to be produced				a	750	3210	3960
	Direct material cost per bat				b	7	9
	Direct material cost in $				a*b	5250	28890	34140
	Direct labor budget
						Youth	Adult	Total
	Bats to be produced				a	750	3210	3960
	Hours required per bat				b	0.5	0.5
	Total hours required				c=a*b	375	1605	1980
	Direct labor cost per hour				d	15	15
	Total direct labor cost				c*d	5625	24075	29700
	Manufacturing overhead budget:
						Youth	Adult	Total
	Bats to be produced				a	750	3210	3960
	Variable manufacturing cost per bat				b	0.5	0.5
	Variable manufacturing cost				c=a*b	375	1605	1980
	Fixed manufacturing overhead:
	Depreciation							600
	Other costs							13260
	Fixed manufacturing overhead				d			13860
	Total manufacturing overhead				c+d			15840
	Predetermined overhead allocation rate (PDOH rate)=Total manufacturing overhead/Total direct labor hours=15840/1980=$ 8 per hour
4	Cost of goods sold budget:
								Total
	Direct material cost							34140
	Total direct labor cost							29700
	Total manufacturing overhead							15840
	Total manufacturing cost incurred during the year							79680
	Add:Beginning finished goods inventory							17210
	Total manufacturing cost							96890
	Less:Ending finished goods inventory						(Note:1)	13125
	Cost of goods sold							83765
	Note:1
						Youth	Adult	Total
	Cost per bat:
	Direct material cost					7	9
	Direct labor cost				(0.5*15)	7.5	7.5
	Manufacturing overhead				(0.5*8)	4	4
	Total cost per bat				a	18.5	20.5
	Bats in ending inventory				b	100	550
	Cost of ending inventory				a*b	1850	11275	13125
5	Selling and administrative expense budget:
						Youth	Adult	Total
	Variable selling and administrative expenses:
	Budgeted sales in $				a	45500	201500	247000
	Supplies				b=a*3%	1365	6045	7410
	Fixed selling and administrative expenses:
	Salaries							14000
	Rent							3000
	Insurance							2000
	Depreciation							300
	Fixed selling and administrative expenses				c			19300
	Total selling and administrative expenses				b+c			26710