3.00 points PA8-4 Preparing Operating Budget Components LO 8-3a, b, c, d Wesley

Question

3.00 points PA8-4 Preparing Operating Budget Components LO 8-3a, b, c, d Wesley Power Tools manutactures a wide variety ot tools and accessornes. One ot its more popular items is a cordless power handisaw. Each handisaw sells tor $32. Wesley expects the tollowing unit sales January February March April May 2 400 2.600 3.100 2900 2 300 Wesley's ending finisthed goods inventory policy is 30 percent of the next month's sale:s Suppose each handisaw takes approximately 60 hours to manufacture, and Wesley pays an average labor wage of $22 per hour Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $6.00 each. The company has an ending raw materials inventory polcy of 20 percent ot the following month's production requirements. Matenals other than the housing unit total $4.50 per handisaw administratve expenses are fxed at 518,000 per month Required Manufacturing overhead for this product includes S72,00d annual fixed overhead (based on production of 27,00d units) and $1.20 per unit variable manufacturing overhead Wesley's selling expenses are percent of sales dollars, and 1. Compute the following for the first quarter not round your intermediate calculations.) January February Mareh 1st Quarter 1. Budgeted Salas Ravenue 2. Budgeted Productioen in Units 3. Budgetedl Cost of Raw Material Purchases for the Plastic Housings 4. Budgeted Direct Labor Cost

Explanation / Answer

1 January February March 1st quarter total Expected units sales 2400 2600 3100 8100 Unit selling price 32 32 32 32 Total sales 76800 83200 99200 259200 2 Production budget January February March 1st quarter total April Budgeted sales 2,400 2600 3100 8100 2900 Add Ending inventory 780 930 870 870 690 Total needs 3,180 3,530 3970 8970 3590 Less beginning inventory 720 780 930 720 870 Units to be produced 2,460 2,750 3,040 8250 2,720 3 Direct material budget January February March 1st quarter total Number of units produced 2,460 2,750 3,040 8,250 Basis of units 1 1 1 1 Production needs 2,460 2,750 3,040 8,250 Add ending material inventory 550 608 544 544 Total material requirements 3010 3358 3,584 8,794 Less beginning material inventory 492 550 608 492 Material to be purchased 2518 2808 2976 8,302 Material price per unit 10.5 10.5 10.5 10.5 Total cost of direct material purchases 26439 29484 31248 87171 4 direct labor budget January February March 1st quarter total Production budget units 2,460 2,750 3,040 8,250 Per unit direct hours required 0.6 0.6 0.6 0.6 Total labor hours needed 1476 1650 1824 4950 Labor price per hour 22 22 22 22 Labor dollars 32472 36300 40128 108900

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