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​:

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​(Click the icon to view the budget​ data.)                                  

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​(Click the icon to view the actual and projected direct materials​ data.)

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​(Click the icon to view the projected direct manufacturing labour​ data.)Manufacturing overhead is allocated at the rate of

$20

per direct manufacturing​ labour-hour. Required

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Requirement 1. Prepare the revenues budget​ (in dollars).

TabComp Corporation
Revenue Budget for 2019
	Units	Price	Total
Widget
Thingamajig
Projected sales

019 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

he 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

Answer 1

Sales Budget
	Widget	Thingamajig	Total
Unit sales	63,000	47,000	110,000
Selling price	$       164.00	$       264.00
Total sales	$10,332,000	$12,408,000	$22,740,000
Production Budget
	Widget	Thingamajig	Total
Sales in Units	63,000	47,000	110,000
Desired units ending inventory	33,000	13,000	46,000
Total unit requirements	96,000	60,000	156,000
Less: units in beginning inventory	28,000	12,000	40,000
Production in Units	68,000	48,000	116,000
Raw Materials Budget
	Widget		Thingamajig
	units	Qty Required	units	Qty Required	Total		Amount
Units Produced	68,000		48,000	Qty	-
A required per unit	5	340000	6	288000	628,000	11	6,908,000
B required per unit	3	204000	4	192000	396,000	6	2,376,000
C required per unit	-		2	96000	96,000	3	288,000
	0		0		0
Total		544000		576000	1120000		9,572,000
	A	B	C	Total
Total pounds used in production	628,000	396,000	96,000	1,120,000
Desired pounds in ending inventory	36,000	31,000	9,000	76,000
Total pounds required	664,000	427,000	105,000	1,196,000
Less: pounds in beginning inventory	31,000	27,000	7,000	65,000
Raw material purchases - pounds	633,000	400,000	98,000	1,131,000
Cost per Pound	$11.00	$6.00	$3.00
Raw material purchases - $	$ 6,963,000	$ 2,400,000	$     294,000	9,657,000
Cost of goods sold		Widget		Thingamajig	Total
Units Sold		63,000		47,000	110,000	9,657,000
	Rate
A	11	315,000	3,465,000	282,000	3,102,000
B	6	189,000	1,134,000	188,000	1,128,000
C	3			94,000	282,000
			4,599,000		4,512,000	9,111,000
				Closing Stock	546,000
Direct Labor Budget:	Widget	Thingamajig	Total
Units produced	68,000	48,000	116,000
Labor hours per unit	3	4
Total labor hours	204,000	192,000	396,000
Rate per hour	$         12.00	$         15.00
Direct labor cost	$ 2,448,000	$ 2,880,000	5,328,000
Units produced	68,000	48,000
	36	60
Units Sold	63,000	47,000
Cost of goods sold	2268000	2820000
Closing stock	$     180,000	$       60,000
Overhead Budget:
	Widget	Thingamajig
Labour Hours required	204,000	192,000
Variable overhead per unit	$         20.00	$         20.00
Total variable overhead	$ 4,080,000	$ 3,840,000
Fixed overhead	$              -	$              -
Total overhead	$ 4,080,000	$ 3,840,000
Noncash overhead expenses	$              -	$              -
Overhead Disbursements	$ 4,080,000	$ 3,840,000
Units produced	68,000	48,000
Rate	60	80
Units Sold	63,000	47,000
Cost of goods sold	3780000	3760000
Closing Stock	$     300,000	$       80,000
Revenue Budget
	Widget	Thingamajig	Total
Sales	$10,332,000	$12,408,000	$22,740,000
Raw Material	4,599,000	4,512,000	9,111,000
Direct labour	$ 2,268,000	$ 2,820,000	$ 5,088,000
Direct overhead	$ 3,780,000	$ 3,760,000	$ 7,540,000
Cost of goods sold	10,647,000	11,092,000	$21,739,000
Gross Margin	$    (315,000)	$ 1,316,000	$ 1,001,000