Question

Prepare the sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, SGA...

Prepare the sales budget, production budget, direct materials budget, direct labor budget, manufacturing overhead budget, SGA budget, and budgeted income statement for ABC Company for the year, given the following information:

ABC expects to sell 10,000 units for the year at $175 per unit.

ABC Company begins the year with 2,000 units and desires ending inventory of 7,000 units.

To produce 1 unit, it takes the following:

DIRECT MATERIALS:

To produce 1 unit: 10 pounds

Waste per unit: 1 pound

Direct materials cost $3 per pound.

ABC Company begins the year with 1,000 pounds of direct materials on hands and desires to end the year with 2,000 pounds of direct materials on hand.

DIRECT LABOR:

It takes 4 hours to produce 1 unit of finished product. The pay rate for employees is $15 per hour

OVERHEAD:

Fixed overhead per year: $30,000

Variable overhead: $5 per unit produced

SGA Expenses:

Fixed SGA Expenses: $10,000 per year

Variable SGA Expenses: $5 per unit sold

Homework Answers

Answer #1

1)

ABC company

Sales Budget

Unit sales 10000
unit price 175
Sales 1750000

2)

ABC company

Production Budget

Unit sales 10000
Ending finished goods desired 7000
Total units required 17000
less:Beginning finished goods (2000)
units to be produced 15000

3)

units to produced 15000
raw material required per unit [10+1] 11
Total material required for production 165000
Ending material desired 2000
Total material required 167000
less:Beginning raw material (1000)
Raw material purchased 166000
material cost per pound 3
Total cost of purchase 498000

4)

Direct labor budget
Unit to produce 15000
Hours required per unit 4
Total hours required for production 60000
Rate per hour 15
Total labor cost 900000
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