Question

Condor Corporation manufactures two different types of coils used in electric motors. In the fall of the current year, the controller compiled the following data.

•	Sales forecast for 20x3 (all units to be shipped in 20x3):

Product	Units		Price
Light coil	55,000		$	250
Heavy coil	35,000			350

•	Raw-material prices and inventory levels:

Raw Material	Expected Inventories January 1, 20x3			Desired Inventories, December 31, 20x3			Anticipated Purchase Price
Sheet metal		33,000	lb.		37,000	lb.	$	14
Copper wire		30,000	lb.		33,000	lb.		7
Platform		5,500	units		6,500	units		3

•	Use of raw material:

	Amount Used per Unit
Raw Material	Light Coil			Heavy Coil
Sheet metal		4	lb.		5	lb.
Copper wire		2	lb.		3	lb.
Platform					1	unit

•	Direct-labor requirements and rates:

Product	Hours per Unit			Rate per Hour
Light coil		4		$	10
Heavy coil		6			15

•	Finished-goods inventories (in units):

Product	Expected January 1, 20x3			Desired December 31, 20x3
Light coil		20,000			25,000
Heavy coil		8,000			9,000

•	Production overhead:

  Overhead Cost Item

Activity-Based Budget Rate

  Purchasing and material handling

$

0.50

per pound of sheet metal and copper wire purchased

  Depreciation, utilities, and inspection

$

6.00

per coil produced (either type)

  Shipping

$

2.00

per coil shipped (either type)

  General production overhead

$

4.00

per direct-labor hour

Prepare the sales budget (in dollars) for 20x3.

Sales Budget for 20x3
	Total
Light coils
Heavy coils
Projected sales	$0

Prepare the production budget (in units) for 20x3.

Production Budget (in units) for 20x3
	Light Coils	Heavy Coils
Projected sales
Total requirements	0	0
Production required (units)	0	0

Prepare the raw material purchases budget (in quantities) for 20x3.

Raw Material Purchases Budget (in Quantities) for 20x3
	Raw Material
	Sheet Metal	Copper Wire	Platform
Light coils
Heavy coils
Production requirements	0	0	0
Total requirements	0	0	0
Purchase requirements (units)	0	0	0

Prepare the raw material purchases budget (in dollars) for 20x3.

Raw Material Purchases Budget for 20x3
Raw Material	Raw Material Required (units)	Anticipated Purchase Price	Total
Sheet metal
Copper wire
Platforms
Total			$0

      

Prepare the direct-labor budget (in dollars) for 20x3

Direct-Labor Budget for 20x3
	Projected Production (units)	Hours per Unit	Total Hours	Rate	Total Cost
Light coils
Heavy coils
Total					$0

Answer 1

Let Light coil = L

Heavy coil = H

Prepare the sales budget (in dollars) for 20x3.

	Sales Budget for 20x3 Total Light coils 13,750,000 Heavy coils 12,250,000 Projected sales $26000000

Sales

L Coil $ 13,750,000 (= $ 250 * 50,000)

H Coil 12,250,000 (= $ 350 * 35,000)

2. Production

L Coil 60,000 units (= Period End Stock - Beginning + Sales = 25000-20000 + 55000)

H Coil 36,000 units (= 9000-8000 + 35000)

3. Raw-material purchases

S metal 424,000 lb. [= End-Beginning + Use = 37000-33000 + (4 * 60000 + 5 * 36000)]

C wire 231,000 lb. [= 33000-30000 + (2 * 60000 + 3 * 36000)]

Platform 37,000 units [= 6500-5500 + (1 * 36000)]