Question

Mercury Bag Company produces cases of grocery bags. The managers at Mercury are trying to develop budgets for the upcoming quarter. The following data have been gathered.

  

Projected sales in units		1,320	cases
Selling price per case	$	240
Inventory at the beginning of the quarter		150	cases
Target inventory at the end of the quarter		100	cases
Direct labor hours needed to produce one case		2	hours
Direct labor wages	$	10	per hour
Direct materials cost per case	$	8
Variable manufacturing overhead cost per case	$	6
Fixed overhead costs for the upcoming quarter	$	220,000

a. Using the above information, develop Mercury's sales forecast in dollars and production schedule in units.

b. What is Mercury's budgeted variable manufacturing cost per case?

c. Prepare Mercury's manufacturing cost budget.

d. What is the projected ending value of the Inventory account?

  

Answer 1

Req 1:
Sales budget in $:
Sales units projected			1320
Selling price per unit			240
Budgeted sales in $			316800
Production Budget in Units:
Salles unit			1320
Add: ending inventory			100
Less: Beginning inventory			150
Production units			1270
Req:
Variable Mmanufacturing cost per case:
Direct Material			8
Direct labouur			20
Variable Manufacturing OH			6
Variable Manufacturing OH			34
Req :
Manufacturing Cost Budget:
Material (1270*8)			10160
Labour (1270*20)			25400
Variable Manufacturing OH (1270*6)			7620
Fixed Manufacturing OH			220000
Manufacturing Cost Budget:			263180
Req:
Total manufacturing cost			263180
Divide: Units produced			1270
Manufacturing Cost per unit			207.23
Ending Inventory units			100
Ending inventory value			20723