Question

Mets Inc. makes baseball equipment. One of the products that they make and sell are baseball bats. Each bat is made of wood and the handle of the bat is covered in a rubber tape to improve grip. Mets Inc. is currently preparing their budget for the next year. They believe they will sell 500,000 bats over the year and that they will sell each one for $35 each. They estimate that, on average, each bat will need 3 feet of wood, 2 feet of rubber tape and .2 hours of direct manufacturing labor to make. They estimate that for the year, they will spend $2 on each foot of wood, $.45 on each foot of tape and $10.50 for each direct labor hour worked. They also estimate that they will spend a total of $147,000 on fixed manufacturing and $245,000 on variable manufacturing costs. 31st, On December 2018 Mets Inc. had $283,500 worth of wood and $36,000 worth of rubber in their inventory. They had originally purchased the wood at $2.10 per foot and the rubber at $.40 per foot. They also had 60,0000 finished bats in their inventory, which had a total cost of $594,000

At the end of the quarter, they want these amounts in their ending inventory:

Wood 14,000 feet

Tape 8,000 feet

Bats (Finished Goods): 50,000 bats

Mets Inc. uses the FIFO method to cost direct materials and finished goods inventory. For the purpose of this budget, the work-in-process inventories are considered to be negligible and ignored and the unit costs of direct materials purchased and finished goods are assumed to be constant for the period. They use direct labor hours to allocate manufacturing overhead.

With this information, please prepare these parts of the master budget for Mets Inc. for the next year. a.

The Production Budget (Schedule 2)

b. The Direct Materials Usage Budget (Schedule 3a)

c. The Ending Inventories Budget (Just Schedule 6A (units) )

Answer 1

a. Production Budget-Schedule 2	Bats
Budgeted unit of sale	500,000
Add: Desired Ending Inventory	50000
Total needs	550,000
Less: Beginning Inventory	-60000
Budgeted Production in units	490,000
B. Direct Material usage budget-Schedule 3a
	Wood	Rubber Tape
Per unit of production need-feet	3	2
Budgeted Production in units	490,000	490,000
Budgeted Direct material usage	1,470,000	980,000
C. Ending inventories budget=Schedule 6A
	No of Units	Per unit cost	Ending Inventory
Wood-Feet	14,000	$2.00	$28,000
Rubber Tape-Feet	8,000	$0.45	$3,600
Finished Goods-Bats	50000	$9.80	$490,000
WN
Calculation of per unit FG Cost	Units	Unit Cost	Per Unit FG Cost
Wood	3	2	6
Rubber Tape	2	0.45	0.9
Direct labor	0.2	10.5	2.1
Variable Manufacturing Cost	245000
Fixed manufacturing Cost	147000
Total Budgeted	392000
Budgted Production in units	490000	(392000/490000)	0.8
Total Cost			9.8