Down Under Products, Ltd, of Australla has budgeted sales of its popular boomera

Question

Down Under Products, Ltd, of Australla has budgeted sales of its popular boomerang for the next four months as follows t Sales 80,000 90,000 120,000 95,000 July is now in the process of preparing a production budget for the second quarter. Past experience has shown that end-of month inventory levels must equal 10% of the following month's unit sales. The inventory at the end of March was 8,000 units. Required: Prepare a production budget by month and in total, for the second quarter Production Budget April ed units sales Total needs

Explanation / Answer

Answer 1 Preparation of production budget by month and in total for the second quarter Down Under Products Ltd. Production Budget April May June Quarter Budgeted unit sales 80000 90000 120000 290000 Add : Ending Inventory 9000 12000 9500 9500 Total Needs 89000 102000 129500 299500 Less : Beginning Inventory 8000 9000 12000 8000 Required Production in Units 81000 93000 117500 291500 Answer 2 Preparation of Manufacturing Overhead budget Yuvwell Corporation Manufacturing Overhead Budget 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Year Budgeted Direct Labour Hours 9800 9100 9400 10200 38500 Variable Manufacturing Overhead rate $4.25 $4.25 $4.25 $4.25 $4.25 Variable Manufacturing Overheads $41,650.00 $38,675.00 $39,950.00 $43,350.00 $163,625.00 Fixed Manufacturing Overhead $66,000.00 $66,000.00 $66,000.00 $66,000.00 $264,000.00 Total Manufacturing Overheads $107,650.00 $104,675.00 $105,950.00 $109,350.00 $427,625.00 Less : Depreciation $16,500.00 $16,500.00 $16,500.00 $16,500.00 $66,000.00 Cash disbursements For Manufacturing Overhead $91,150.00 $88,175.00 $89,450.00 $92,850.00 $361,625.00 Answer 3 Predetermined Overhead rate = Estimated Total Manufacturing Overheads / Budgeted Direct Labour hours Predetermined Overhead rate = $427625 / 38500 direct labour hours = $11.11 per direct labour hour

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