P9-22 Integrated Operating Budgets The East Division of Kensic Company manu- fac

Question

P9-22 Integrated Operating Budgets The East Division of Kensic Company manu- factures a vital component that is used in one of Kensic's major product lines. The East Division has been experiencing some difficulty in coordinating activities between its various departments, which has resulted in some shortages of the component at critical times. To he manager of East Division has decided to initiate a monthly budgeting system that is integrated between departments. The first budget is to be for the second quarter of the current year. To assist in developing the budget figures, the divisional controller has accumulated the following information: Sales. Sales through the first three months of the current year were 30,000 units. Actual sales in units for January, February, and March, and planned sales in units over the next five months, are given below: 6,000 February (actual) . ..10,000 March (actual)... 14,000 April (planned) . 20,000

Explanation / Answer

1) Production Budget for East Division for second quarter

2) Direct materials budget in units and dollars

3) Direct labour budget in hours and dollars

4) Manufacturing overhead budget

April May June Quarter total Sales 20,000 35,000 50,000          1,05,000 Add: closing inventory     7,000 10,000     9,000 Less: opening inventory     4,000     7,000 10,000 Budgeted production in units 23,000 38,000 49,000          1,10,000

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