Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requir

Question

Ornamental Sculptures Mfg. manufactures garden sculptures. Each sculpture requires 8 pounds of direct materials at a cost of $3 per pound and 0.4 direct labor hours at a rate of $14 per hour. Variable manufacturing overhead is charged at a rate of $4 per direct labor hour. Fixed manufacturing overhead is $4,700 per month. The company’s policy is to maintain direct materials inventory equal to 30% of the next month’s materials requirement. At the end of March the company had 5,380 pounds of direct materials in inventory. The company’s production budget reports the following. Production Budget March April May Units to be produced 4,000 5,400 5,700 (1) Prepare direct materials budgets for March and April. (2) Prepare direct labor budgets for March and April. (3) Prepare factory overhead budgets for March and April.

Explanation / Answer

March April Budgeted production (units) 4000 5400 Materials requirements per unit 8 8 Materials needed for production (Ibs.) 32000 43200 Budgeted ending inventory (bs.) 12960 13680 Total materials requirements (Ibs.) 44960 56880 Budgeted beginning inventory (lbs.) -5380 -12960 Materials to be purchased (Ibs.) 39580 43920 Direct material cost per lb 3 3 Total budgeted direct materials 118740 131760 2 March April Budgeted production (units) 4000 5400 DL hours per unit 0.4 0.4 Total direct labor hours needed 1600 2160 Direct labor rate per hour 14 14 Total budgeted direct labor 22400 30240 3 March April Total direct labor hours needed 1600 2160 VOH rate per DL hour 4 4 Budgeted variable overhead 6400 8640 Budgeted fixed overhead 4700 4700 Total budgeted factory overhead 11100 13340

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