Question

Mercury Bag Company produces cases of grocery bags. The managers at Mercury are trying to develop budgets for the upcoming quarter. The following data have been gathered.

  

Projected sales in units		1,910	cases
Selling price per case	$	240
Inventory at the beginning of the quarter		150	cases
Target inventory at the end of the quarter		100	cases
Direct labor hours needed to produce one case		2	hours
Direct labor wages	$	10	per hour
Direct materials cost per case	$	8
Variable manufacturing overhead cost per case	$	6
Fixed overhead costs for the upcoming quarter	$	220,000

a. Using the above information, develop Mercury's sales forecast in dollars and production schedule in units.

b. What is Mercury's budgeted variable manufacturing cost per case?

c. Prepare Mercury's manufacturing cost budget.

d. What is the projected ending value of the Inventory account?

Answer 1

D E F G H I J K L M N O P Q 4 AB 1 a) Revenue = Sales unit * Price per unit = 1910*240 2 Revenue 458,400.00 4 b) 5 6 budgeted variable manufacturing cost per case = Direct materials cost per case+Direct labor wages Direct labor hours needed to produce one case+Variable manufacturing overhead cost per case budgeted variable manufacturing cost per case = 8+10*2+6 budgeted variable manufacturing cost per case = 34 8 C) Target inventory at the end of the quarter-Inventory at the beginning of the quarter+Projected sales in units = 100-150+1910 Budget production unit Direct materials cost per case Direct materials cost 1860 $ 8.00 $ 14,880.00 Direct materials cost per case *Budget production unit = 8*1860 Direct labor cost per case Total labor cost $ 10.00 per hour $ 18,600.00 Direct labor cost per case*Budget production unit = 10*1860 Variable Mfg overhead cost per case * Budget production unit = 6*1860 Variable Mfg overhead cost per case Total Variable Mfg overhead cost $ 6.00 $ 11,160.00 Fixed overhead costs for the upcoming quarter $ 220,000.00 Total manufacturing cost $ 264,640.00 d) cost per case = Total manufacturing cost/ units produced = 264640/1860 = 142.28 projected ending value of the Inventory = Target inventory at the end of quarter * cost per case = 100*142.2796 projected ending value of the Inventory = 14227.96