Production and Direct Labor Cost Budgets Two-Leg Company manufactures slacks and

Question

Production and Direct Labor Cost Budgets

Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 21,610 and 44,680 pairs, respectively, for March 2016. The finished goods inventory is assumed as follows:

Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations:

a. Prepare a production budget for March.

b. Prepare the March direct labor cost budget for the four sewing operations, assuming a $11 wage per hour for the inseam and outerseam sewing operations and a $18 wage per hour for the pocket and zipper sewing operations.

Kickers 101 Denims March 1 estimated inventory 970 1,260 March 31 desired inventory 360 1,580

Explanation / Answer

a.

Production Budget for March is prepared as under:

b.

Direct labour cost budget is prepared as under:

Two-Leg Company Production Budget March 2016 (assumed data) Kickers 101 Denims Expected units to be sold 21,610 44,680 + Planned Ending Units 360 1,580 Beginning Units 970 1,260 Total units to be produced 21,000 45,000

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