Question

Two products are manufactured by the TabComp ​Corporation: Widgets and Thingamajigs. In July 2018​, the controller of TabComp​, upon instructions from senior​ management, had the budgeting department gather the following data in order to prepare budgets for 2019​:

2019 Projected Sales
Product	Units		Price
Widget	63,000		$164
Thingamajig	47,000		$264

2019 Inventories in Units
	Expected		Target
Product	January 1, 2019		December 31, 2019
Widget	28,000		33,000
Thingamajig	12,000		13,000

The following direct materials are used to produce one unit of Widget and​ Thingamajig:

	Amount Used per Unit
Direct Material	Unit	Widget	Thingamajig
A	Kilograms	5	6
B	Kilograms	3	4
C	Each	0	2

Projected data for

2019

with respect to direct materials are as​ follows:

	Anticipated		Expected		Target Inventories
Direct	Purchase		Inventories		December 31,
Material	Price		January 1, 2019		2019
A	$11		31,000	kilograms	36,000	kilograms
B	$6		27,000	kilograms	31,000	kilograms
C	$3		7,000	units	9,000	units

Projected direct manufacturing labour requirements and rates for

2019

are as​ follows:

Product	Hours per Unit	Rate per Hour
Widget	3	$12
Thingamajig	4	$15

Manufacturing overhead is allocated at the rate of $20 per direct manufacturing​ labour-hour.

Based on the preceding projections and budget requirements for Widgets and​ Thingamajigs, prepare the following budgets for

2019​:

1. Revenues budget​ (in dollars)

2. Production budget​ (in units)

3. Direct material purchases budget​ (in quantities)

4. Direct material purchases budget​ (in dollars)

5. Direct manufacturing labour budget​ (in dollars)

6. Budgeted finished goods inventory at December​ 31,

2019

​(in dollars)

Answer 1

Revenue budget:

Sales units of each product * Selling price per unit

Production budget:

Sales + Ending inventory of finished goods - Beginnig inventory of finished goods = Production.