Detmer Enterprises has the following budgeted sales Budgeted Sales_in Units June

Question

Detmer Enterprises has the following budgeted sales Budgeted Sales_in Units June July August September 6,800 units 5,100 units 4,400 units 7,300 units Past experience has shown that the ending finished goods inventory for each month should be equal to 20% of the next month's expected sales in units. Additionally, it is known that every unit produced requires four direct labor hours to make and direct laborers are paid $15 per hour. Assume that Detmer pays 65% of its direct labor in the same month the employee works, pays 30% of its direct labor in the month after the employee works, and the final 5% is paid two months after the employee works. Calculate the budgeted cash payments for direct labor for the month of August.

Explanation / Answer

June July August Budgeted sales 6800 5100 4400 Add: Desired ending inventory 1020 880 1460 Total units needed 7820 5980 5860 Less: Beginning inventory 1360 1020 880 Budgeted production 6460 4960 4980 August For June 19380 =6460*4*15*5% For July 89280 =4960*4*15*30% For August 194220 =4980*4*15*65% Budgeted cash payment for direct labor 302880

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