Note: I need a step by step answer to the following question. It has a part A an
ID: 2553918 • Letter: N
Question
Note: I need a step by step answer to the following question. It has a part A and part B.
Hot Coffee Manufacturing produces and sells oak tables. The budgeted manufacturing costs per table are as follows:
Direct costs
Oak top 48 square feet at $10 per sq. ft.
Table legs 4 legs at $5 per leg
Direct labor is 3 hours and 24 minutes per table at $15 per hour.
The variable overhead rate is $6 per direct labor hour and the fixed overhead rate is $8 per direct labor hour.
Inventories are expected to be as follows:
Beginning
Target Ending
Direct Materials
Oak tops
500
550
Table legs
240
200
Finished Goods
20 tables
30 tables
Budgeted Sales for May, Year 18 are expected to be 2,000 tables. Selling prices are budgeted to be $600 per table.
A. For May Year 18, prepare a
a. Sales Budget.
b. Production Budget in units
c. Direct materials budget in units and in dollars
d. Manufacturing Labor Budget
e. Overhead Budget
B. Refer to A above, the company expects to have beginning cash of $150,000 on May 1, Year 18. In addition to the above expenditures, the company is expected to have the following expenses the income statement:
a. Selling Expenses 24,000
b. Administrative Expenses 16,000
c. Depreciation 20,000
Prepare a cash budget for May Year 18
Beginning
Target Ending
Direct Materials
Oak tops
500
550
Table legs
240
200
Finished Goods
20 tables
30 tables
Explanation / Answer
Solution:
Part A(a) – Sales Budget
Sales Budget for May
Budgeted Sales Units (tables)
2000
Selling Price per table
$600
Budgeted Sales Revenue (1200*600)
$1,200,000
Part A(b) – Production Budget in Units
Production Budget
Expected Sales Units
2,000
Plus: Desired Ending Inventory
30
Total Units needed
2030
Less: Expected Beginning Inventory
20
Production Requirements
2010
Part A© – Direct materials budget in unit and in dollars
Oak Tops
Table Legs
Total
Production requirements (number of tables)
2010
2010
Raw material required per table
48 feet
4 legs
Raw material required for production
96480
8040
Plus: Desired Ending Inventory
550
200
Total raw materials need
97030
8240
Less: Beginning Inventory
500
240
Raw material to be purchased
96530
8000
Cost per unit
$10.00
$5.00
Cost of purchases
$965,300
$40,000
$1,005,300
Part A(d) – Manufacturing Labor Budget
Direct labor Cost budget
Units to be produced (from part 2)
2010
Required Direct Labor time per unit (3 hours and 24 minutes per table)
3.40
Total required direct labor time
6834
Direct labor rate per hour
$15
Total Direct labor cost
$102,510
Part A(e) – Overhead Budget
Overhead Budget
Total Direct Labor Hours Needed for Production
(from Part A(d))
6834
Total Budgeted Variable Overhead (6834*Variable Overhead Rate $6 per DLH)
$41,004
Fixed Overhead (6834*Fixed Overhead Rate $8 per DLH)
$54,672
Total Budgeted Overhead Expense
$95,676
Part B – Cash Budget --- Pls confirm the collection schedule for credit sale. Are all the credit sales collected in the May month ?
Sales Budget for May
Budgeted Sales Units (tables)
2000
Selling Price per table
$600
Budgeted Sales Revenue (1200*600)
$1,200,000
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