Question

Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin Greiner Company makes and sells high-quality...

Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin

Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiner’s master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 6,500 glare filters in inventory on December 31 of the current year, and has a policy of carrying 30 percent of the following month’s projected sales in inventory. Information on the first four months of the coming year is as follows:

January February March April
Estimated unit sales 37,400 35,400 39,800 40,800
Sales price per unit $81 $81 $77 $77
Direct labor hours per unit 2.90 2.90 2.50 2.50
Direct labor hourly rate $19 $19 $21 $21
Direct materials cost per unit $8 $8 $8 $8

Required:
Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.

1. Prepare the following monthly budgets for Greiner Company for the first quarter of the coming year.

a. Production budget in units:

Greiner Company
Production Budget (units)
For the First Quarter of the Coming Year
January February March Total
Unit sales
Desired ending inventory
Total units required
Less: Beginning inventory
Units produced

b. Direct labor budget in hours: Round your answers to two decimal places, if required.

Greiner Company
Direct Labor Budget (hours)
For the First Quarter of the Coming Year
January February March Total
Units produced
Direct labor hours per unit
Total labor budget (hours)

c. Direct materials cost budget:

Greiner Company
Direct Materials Cost Budget
For the First Quarter of the Coming Year
January February March Total
Units produced
Cost per unit $ $ $ $
Total direct materials $ $ $ $

d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.

Greiner Company
Sales Budget (dollars)
For the First Quarter of the Coming Year
January February March Total
Unit sales
Unit selling price $ $ $ $
Total sales revenue $ $ $ $

2. Calculate the total budgeted contribution margin for Greiner Company by month and in total for the first quarter of the coming year. (CMA adapted)

Greiner Company
Budgeted Contribution Margin
For the First Quarter of the Coming Year
January February March Total
Sales revenue $ $ $ $
Direct labor cost
Materials cost
Contribution margin $ $ $ $

Homework Answers

Answer #1
January February March April
Estimated unit sales 37,400 35,400 39,800 40,800
Sales price per unit $81 $81 $77 $77
Direct labor hours per unit 2.9 2.9 2.5 2.5
Direct labor hourly rate $19 $19 $21 $21
Direct materials cost per unit $8 $8 $8 $8
a. Production budget in units:
Greiner Company
Production Budget (units)
For the First Quarter of the Coming Year
January February March Total
Unit sales              37,400              35,400              39,800            112,600
Desired ending inventory              10,620              11,940              12,240              12,240
Total units required              48,020              47,340              52,040            124,840
Less: Beginning inventory                6,500              10,620              11,940                6,500
Units produced              41,520              36,720              40,100            118,340
Greiner Company
Direct Labor Budget (hours)
For the First Quarter of the Coming Year
January February March Total
Units produced              41,520              36,720              40,100            118,340
Direct labor hours per unit                    2.9                    2.9                    2.9                    2.9
Total labor budget (hours)            120,408            106,488            116,290            343,186
Greiner Company
Direct Materials Cost Budget
For the First Quarter of the Coming Year
January February March Total
Units produced              41,520              36,720              40,100            118,340
Cost per unit                        8                        8                        8                        8
Total direct materials            332,160            293,760            320,800            946,720
Greiner Company
Sales Budget (dollars)
For the First Quarter of the Coming Year
January February March Total
Unit sales              37,400              35,400              39,800            112,600
Unit selling price                     81                     81                     77
Total sales revenue        3,029,400        2,867,400        3,064,600        8,961,400
Greiner Company
Budgeted Contribution Margin
For the First Quarter of the Coming Year
January February March Total
Sales revenue        3,029,400        2,867,400        3,064,600        8,961,400
Direct labor cost        2,287,752        2,023,272        2,442,090        6,753,114
Materials cost            299,200            283,200            318,400            900,800
Contribution margin            442,448            560,928            304,110        1,307,486
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