Wesley Power Tools manufactures a wide variety of tools and accessories. One of

Question

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Use the following information about this product line to complete the problem requirements. Each handisaw sells for $36. Wesley expects the following unit sales: Wesley?s ending finished goods inventory policy is 20 percent of the next month?s sales. Suppose each handisaw takes approximately .75 hours to manufacture, and Wesley pays an average labor wage of $26 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $7.00 each. The company has an ending raw materials inventory policy of 25 percent of the following month?s production requirements. Materials other than the housing unit total $4.50 per handisaw. Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley?s selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month. Required: 1. Compute the following for the first quarter: (Round your intermediate calculations for Direct Labor Budget to 2 decimal places and other intermediate calculations to nearest whole dollar.)

Explanation / Answer

Statement showing compuatations Particulars January February March April May Jan +Feb+Mar Unit Sales                   2,800.00                   3,000.00                      3,500.00                              3,300.00                           2,700.00                            9,300.00 Sales Revenue = Noof units*36              100,800.00              108,000.00                 126,000.00                         118,800.00                        97,200.00                        334,800.00 Ending Inv @20% of next mnth sales                       600.00                       700.00                         660.00                                  540.00                                660.00 Opening Inv =closing inv of prev mnth                       560.00                       600.00                         700.00                                  660.00                              540.00                                560.00 Production= Sales + End-Op                   2,840.00                   3,100.00                      3,460.00                              3,180.00                            9,400.00 Total No of hrs @.75 per unit                   2,130.00                   2,325.00                      2,595.00                              2,385.00                            7,050.00 Budgeted Labour cost@26                 55,380.00                 60,450.00                   67,470.00                            62,010.00                        183,300.00 Ending Inventory @25% of Plastic Housing                       775.00                       865.00                         795.00                                795.00 Opening = Closing of prev mnth 0 (Refer Note)                       775.00                         865.00                                         -   Purchases of Plastic Housing = Prod +Cl-op                   3,615.00                   3,190.00                      3,390.00                          10,195.00 Cost of Purchases of housing @7 Per Unit                 25,305.00                 22,330.00                   23,730.00                          71,365.00 Note: Information about opening Inv is not given thus assumed it to be 0

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