Kennewick Manufacturing Company expects a 15% increase over the 200,000 units of

Question

Kennewick Manufacturing Company expects a 15% increase over the 200,000 units of product VIP sold last year and a 20% increase in the 160,000 units of product ZUM sold. VIP and ZUM are herbal supplements. Budgeted raw materials and finished goods inventories for the year were as follows:

Raw materials Beginning Ending

X 41,400 lbs. 39,800 lbs.
Y 46,000 gal. 49,000 gal.

Finished goods

VIP 19,400 units 18,000 units
ZUM 15,000 units 16,500 units

Materials and labor required in production:

For one unit VIP -- 2 lbs. of X, 2 gal. of Y
direct labor 2 hours at $6 per hour
For one unit ZUM -- 3 lbs. of X, 2 gal. of Y
direct labor 3 hours at $6 per hour

Factory overhead is applied at the rate of $4 per hour of labor used

Budgeted casts of raw materials:

X -- $1.50 per lb.
Y -- $2.25 per gal.

Selling price of VIP is $60 and SUM is $75

Prepare the following:

A direct labor cost budget.

Determine the production cost budgeted per unit of VIP and ZUM.

Explanation / Answer

Kennewick Company's

Direct Labour Cost Budget

Kennewick Company's

Production Cost Budget

12

12

Kennewick Company's

Direct Labour Cost Budget

VIP ZUM Total Units of production 230000 192000 Add Closing Finished Goods 18000 16500 248000 208500 Less Opening Finished Goods 19400 15000 Required Production 228600 193500 Required Labour Hours per Unit 2 3 Total Labour hours Required 457200 580500 Rate per Hour $6 $6 Total Direct labour Cost $2,743,200 $3,483,000

Kennewick Company's

Production Cost Budget

VIP ZUM Per Unit Per Unit Raw Materials X 2 lbs 3 lbs Y 2 gal 2 gal Cost of Raw Materials X (1.5) 3 4.5 Y (2.25) 4.5 4.5 Required Direct Labour Hours 2 3 Labour cost per unit ($6)

12

12

Factory Cost $4 per Labour Hour 8 12 Production Cost per Unit 27.5 33

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.