Question

Budget Preparation Westport Company is preparing its master budget for May. Use the estimates provided to determine the amounts necessary for each of the following requirements. Estimates may be related to more than one requirement) a. What should total sales revenuebe il territories and Westimate sales of 50,000 and 100,000 units, respectively, and the unit selling price 51632 $ 9,750,000 b. If the beginning finished goods inventory is an estimated 6.000 units and the desired ending inventorys 11.000 155,000 units show hobe produced c. What dollar amount of materials should be purchased at $5.50 per pound if each unit of product requires 25 pounds and be pounds respectively Inventories should be 12.000 and 13,500 d. How much direct labor cost should be incurred if each unit produced requires 0.5 hours an hourly rate of $227 e. How much manufacturing overhead should be incurred if foed manufacturing overheads 45.000 and variable manufacturing overhead is 55 per direct labor hour?

Answer 1

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Ans:

Part- (a) & (b): Answer is correct.

Part-(c): Dollar amount of material should be purchased: $ 2,139,500

Workings:

	Amount in $
(i) Unit needs to be produced:	155,000 Units
(ii) Material required per unit of production:	2.5 Pound
(iii) Total materials required (i x ii):	387,500 Pounds
(iv) Beginning materials:	(12,000) Pounds
(v) Ending materials:	13,500 Pounds
(vi) Total materials required (iii - iv + v):	389,000 Pounds
(vii) Material price per pound:	$5.50
(viii) Dollar amount of material should be purchased (vi x vii):	$2,139,500

Part-(d): Direct labor cost should be incurred: $ 1,705,000

Workings:

	Amount in $
(i) Units to be produced:	155,000 Units
(ii) Labor hour required per unit:	0.5 Hours
(iii) Total labor hours required (i x ii):	77,500 Hours
(iv) Hourly rate:	$22
(v) Total labor cost (iii x iv):	$1,705,000

Part-(e): Manufacturing overhead should be incurred: $ 432,500

Workings:

	Amount in $
(i) Total labor hour required:	77,500 Hours
(ii) Variable overhead (77,500 hours x $5):	$387,500
(iii) Fixed overhead: (given)	$45,000
(iv) Total manufacturing overhead (ii + iii):	$432,500

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