AE9-9 Choo-Foo Company makes and sells artistic frames for pictures. The control

Question

AE9-9 Choo-Foo Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2011. January February March April May Estimated unit sales 14,000 15,000 7,000 8,000 9,000 Sales price per unit $50.45 $47.45 $47.45 $47.45 $47.45 Direct labor hours per unit 2.5 2.5 1.1 1.1 1.1 Wage per direct labor hour $7.70 $7.70 $7.70 $9.70 $9.70 Choo-Foo has a labor contract that calls for a wage increase to $9.70 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1. Choo-Foo expects to begin the year with 20,000 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 40% of the second following month's sales. Instructions Prepare a production budget and a direct labor budget for Choo-Foo Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours. (Round hours per unit and rate per hour to 2 decimal places, e.g. 10.50. Enter all amounts as positive amounts and subtract where necessary.)

Explanation / Answer

Choo-Foo Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2011.


January February March April May
Estimated unit sales 12,000 16,000 6,000 9,000 10,000
Sales price per unit $49.65 $47.23 $47.23 $47.23 $47.23
Direct labor hours per unit 1.7 1.7 1.1 1.1 1.1
Wage per direct labor hour $7.80 $7.80 $7.80 $9.80 $9.80

Choo-Foo has a labor contract that calls for a wage increase to $9.80 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1.

Choo-Foo expects to begin the year with 20,000 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month's sales, plus 50% of the second following month's sales.


QUESTION 1:
Instructions
Prepare a production budget and a direct labor budget for Choo-Foo Company by month and for the first quarter of the year. The direct labor budget should include direct labor hours. (Round hours per unit and rate per hour to 2 decimal places, e.g. 10.50. Enter all amounts as positive amounts and subtract where necessary.)


CHOO-FOO COMPANY
Production Budget
For the Quarter Ending March 31, 2011

Jan Feb March Total

_______________ ___________ ___________ ___________ ___________
Plus:
_______________ ___________ ___________ ___________ ___________


_______________ ___________ ___________ ___________ ___________
Less:
_______________ ___________ ___________ ___________ ___________


Production needed ___________ ___________ ___________ ___________


QUESTION 2:
CHOO-FOO COMPANY
Direct Labor Budget
For the Quarter Ending March 31, 2011


Jan Feb March Total

_______________ ___________ ___________ ___________
_______________ x ___________ x ___________ x ___________

_______________ ___________ ___________ ___________
_______________ x $ __________ x $ __________ x $ __________

Total Direct Labor $ ___________ $ ___________ $ ___________ $ ___________

answer

production budget jan feb march total budgeted sales 12000 16000 6000 34000 plus ending FG inv 19000 10500 14000 14000 31000 26500 20000 48000 less beginning FG inv 20000 19000 10500 20000 production needed 11000 7500 9500 28000 dl budget jan feb march total production needed 11000 7500 9500 hours per unit1.701.701.10 18700 12750 10450 rate per hour 7.807.807.80 total DL 1458609945081510326820

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