Question

Manufacturing Company is preparing its budgets for the first quarter of 20X6. The company sells two different types of power tools: drills and saws. Information availabie manufactures and to prepare the budgets is provided below ESTIMATED SALES Unit Price Units Product 105.00 60,000 S 40,000 Drills 120.00 Saws ESTIMATED INVENTORIES Ending Inventory Beginning 20,000 7,500 30,000 31,000 5,500 24,000 9,000 35,000 32,000 7,200 Finished Goods, Drills (Units) Finished Goods, Saws (Units) Direct Materials, Metal (Pounds) Direct Materials, Plastic (Pounds) Direct Materials, Handles (Each) ESTIMATED MANUFACTURING COSTS PER UNIT OF FINISHED PRODUCT Manufacturing Cost Drill Saw Direct Materials: Metal Plastic Handles Direct Labor 40.00S 15.00 3.00 24.00 32.00 15.00 0.00 48.00 Manufacturing Overhead: Variable 3.00 5.00 Total fixed manufacturing overhead for each quarter is estimated to be $225,000. 10

Answer 1

Budgets of Siounx Manufacturing Company

Sales Revenue Budget
Product	Drill	Saw
Units	60,000	40,000
(x) Unit Price	$             105	$             120
Sales revenue ( in dollars)	$ 6,300,000	$ 4,800,000

Production Budget (units)
Product	Drill	Saw
Sales (in units)	60,000	40,000
Add: Closing Inventory of finished goods	24,000	9,000
Total units required	84,000	49,000
Less: Opening Inventory of finished goods	(20,000)	(7,500)
Budgeted Production	64,000	41,500

Budgeted Statement of Cost of goods manufactured
Product	Drill	Saw	Total
Direct Material p.u.
Metal	$              40	$              32
Plastic	$                15	$               15
Handles	$                 3	$              -
Total Direct material p.u.	$               58	$              47
Direct Labor p.u.	$               24	$              48
Variable Manufacturing OH p.u.	$                 3	$                5
Maunfacturing Variable Cost p.u.	$               85	$            100
(x) Budgeted Production	64,000	41,500
Total Variable Cost of manufacture	$ 5,440,000	$ 4,150,000	$ 9,590,000
Add: Fixed manufacturing OH			$    225,000
Total Manufacturing Cost			$ 9,815,000
Add: Closing WIP			$             -
Less: Opening WIP			$             -
Cost of goods manufactured			$ 9,815,000