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 $44. Wesley expects the following unit sales: Wesley's ending finished goods inventory policy is 30 percent of the next month's sales. Suppose each handisaw takes approximately 0.75 hours to manufacture, and Wesley pays an average labor wage of $18 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. 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 computations Particulars Jan Feb Mar Apr May Sales a              2,000.00                                 2,200.00                   2,700.00                       2,500.00                     1,900.00 Finished Goods @30% of next month   b                  660.00                                    810.00                       750.00                           570.00 Beginning = Finished of Prev Month   c                  600.00                                    660.00                       810.00                           750.00                         570.00 Budgeted Production d= a+b-c              2,060.00                                 2,350.00                   2,640.00                       2,320.00 Budgeted Sales Revenue = 44*a            88,000.00                              96,800.00              118,800.00                   110,000.00 Time Required e= .75*d              1,545.00                                 1,762.50                   1,980.00                       1,740.00 Budgeted Direct Labour Cost =18*e            27,810.00                              31,725.00                 35,640.00                     31,320.00 Plastic Housing for Production f= 1*d              2,060.00                                 2,350.00                   2,640.00                       2,320.00 Ending g=25% of next month                  587.50                                    660.00                       580.00 Beginning h= Ending of prev month                  515.00                                    587.50                       660.00 Purchases i = f+g-h              2,132.50                                 2,422.50                   2,560.00 Cost of Purchases for Plastic Housingj = 7*i            14,927.50                              16,957.50                 17,920.00

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