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.)

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:

Explanation / Answer

Wesley Power Tools January February March 1st Quarter Total 1. Budgeted Sales Revenue $      88,000 $ 96,800 $1,18,800 $3,03,600 2. Budgeted Production in Units 2060 2350 2640         7,050 3. Budgeted Cost of Raw Materials Purchases fo Plastic Housings $      14,928 $ 16,958 $   17,920 $   49,805 4. Budgeted Direct Labor Costs      27,810.00 31,725.00 35,640.00 95,175.00 Working Notes Budgeted sale Revenue January February March April May Budegeted sales units 2000 2200 2700 2500 1900 Budgted sales revenue @ $ 44 per units $         88,000 $    96,800 $ 1,18,800 $ 1,10,000 $ 83,600 in units Budgeted production in units January February March April May Budgeted sales (Units) 2000 2200 2700 2500 1900 Ending FG Inventory units (30% of next month sales) 660 810 750 570 0 Less Opening FG Inventory (30% of the current month sales) 600 660 810 750 570 Budgeted production in Units (A + B -C) 2060 2350 2640 2320 Budgeted cost of Raw Materials purchase for Plastic Housings Budgeted production in Units 2060 2350 2640 2320 0 Cost of Plastic housing for budgeted production @ $ 7 per unit $         14,420 $    16,450 $     18,480 $     16,240 Ending Raw material requirement (25% of following month) $            4,113 $      4,620 $       4,060 $                - Opening Raw Material requirement (25% of the current month) $            3,605 $      4,113 $       4,620 $       4,060 Cost of Raw Material Purchases (A + B -C) $         14,928 $    16,958 $     17,920 Budgeted Labor cost Budgeted production units 2060 2350 2640 2320 Labor hours required to manufacture each unit @ 0.75 hrs          1,545.00     1,762.50      1,980.00      1,740.00 Labor cost @ $ 18 per hour        27,810.00 31,725.00 35,640.00 31,320.00

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