Exercise 21-9 (Part Level Submission) January February March April May (a) DONNE
ID: 2482017 • Letter: E
Question
Exercise 21-9 (Part Level Submission)
January
February
March
April
May
(a)
DONNEGAL COMPANY
Production Budget
For the Quarter Ending March 31, 2014
Exercise 21-9 (Part Level Submission)
Donnegal Company makes and sells artistic frames for pictures. The controller is responsible for preparing the master budget and has accumulated the following information for 2014.January
February
March
April
May
Estimated unit sales 10,100 11,900 8,400 8,000 8,300 Sales price per unit $50.0 $47.7 $47.7 $47.7 $47.7 Direct labor hours per unit 2.1 2.1 1.6 1.6 1.6 Wage per direct labor hour $8 $8 $8 $9 $9Donnegal has a labor contract that calls for a wage increase to $9 per hour on April 1. New labor-saving machinery has been installed and will be fully operational by March 1.
Donnegal expects to begin the year with 14,860 frames on hand and has a policy of carrying an end-of-month inventory of 100% of the following month’s sales, plus 40% of the second following month’s sales.
Explanation / Answer
**Beginning inventory of a month is a ending inventory of last momth .
jan feb mar Total sales in units 10100 11900 8400 30400 Add:desired ending inventory 15260 [11900+(8400*.40)] 11600 [8400+(8000*.40)] 11320 [8000+(8300*.40)] 38180 Total needs 25360 23500 19720 68580 less:Beginning inventory -14860 -15260 -11600 -41720 Required production units 10500 8240 8120 26860Related Questions
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