Need help with Manufacturing overhead budget for 2016. Please show all steps tha

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Need help with Manufacturing overhead budget for 2016. Please show all steps thank you.

Country Chic Inc Information Country Chic Inc makes do-it-yourself kits for people to refinish their own furniture complete with an easy to understand instructional DVD Standard costs per kit are as follows: Sales of this product have been increasing at an average rate of 50% per year 2015 sales totaled 60,000 kits, with 30% of sales occurring in the firstqu3ilei. 29% in the second quarter. 40% in the third quarter and 10% in the fourth quarter. Country Chic Inc expects that Quarterly sales will continue to increase at the same rate over the next 2 years and will follow the same Quarterly pattern. All sales are on credit. Historically. 60% of sales have been collected in the quarter of sale and 39% in the following quarter, and the rest has been uncollectible. The manufacturing division tries to maintain an inventory of finished goods equal to 6% of the next quarter s sales, and an inventory of materials equal to 4% of the next quarter's production requirements. Country Chic Inc pays for 70% of the materials purchased in the quarter they are purchased and the remaining in the quarter after purchase. When applying variable manufacturing overhead Country Chic Inc bases it on direct labor hours at the above variable overhead rate. Country Chic Inc annual fixed manufacturing overhead totals $150,000, including $40,000 of depreciation that is incurred uniformly throughout the year. Country Chic Inc estimates its ending finished goods using the absorption method. The company budgets quarterly variable selling expenses at 8% commission on sales dollars per quarter. Quarterly fixed administrative expenses are $4,000 and depreciation of $5,000, for a total of 9,000.

Explanation / Answer

Total sales for the Year 2016 will be 60,000*(1+50%) = 90,000 Kits. Quarterly sales for 2016 will therefore, be as follows:

Quarter 1 = 90,000*30% = 27,000

Quarter 2 = 90,000*20% = 18,000

Quarter 3 = 90,000*40% = 36,000

Quarter 4 = 90,000*10% = 9,000

Now, we need to determine the total production and total number of direct labor hours to achieve that production.

__________

The manufacturing overhead budget is given below:

Country Chic Inc. Manufacturing Overhead Budget for the Year 2016 Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales (in Units) 27,000 18,000 36,000 9,000 90,000 Add Desired Ending Inventory 1,080 (18,000*6%) 2,160 (36,000*6%) 540 (9,000*6%) 2,430 (90,000*(1+50%)*6%)) 2,430 Less Opening Inventory 1,620 (27,000*6%) 1,080 (18,000*6%) 2,160 (36,000*6%) 540 (9,000*6%) 1,620 Production Needed (A) 26,460 19,080 34,380 10,890 90,810 Direct Labor Hour Per Unit (B) .5 .5 .5 .5 .5 Total Direct Labor Hours (A*B) 13,230 9,540 17,190 5,445 45,405 Variable Overhead Rate Per Hour (C) 4 4 4 4 4 Total Variable Overhead (A*B*C) 52,920 38,160 68,760 21,780 181,620 Fixed Overhead (Evenly Distributed) 37,500 37,500 37,500 37,500 150,000 Total Manufacturing Overhead (150,000/4) 90,420 75,660 1,06,260 59,280 331,620 Less Depreciation (40,000/4) 10,000 10,000 10,000 10,000 40,000 Cash Paid for Manufacturing Overhead $80,420 $65,660 $96,260 $49,280 $291,620

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