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 revenue be if territories E and W estimate sales of 50,000 and 100,000 units, respectively, and the unit selling price is $25?
$Answer

b. If the beginning finished goods inventory is an estimated 6,000 units and the desired ending inventory is 6,500 units, how many units should be produced?
Answer units

c. What dollar amount of materials should be purchased at $1.50 per pound if each unit of product requires 2.5 pounds and beginning and ending materials inventories should be 12,000 and 13,500 pounds, respectively.
$Answer

d. How much direct labor cost should be incurred if each unit produced requires 0.5 hours at an hourly rate of $14?
$Answer

e. How much manufacturing overhead should be incurred if fixed manufacturing overhead is $45,000 and variable manufacturing overhead is $1 per direct labor hour?
$Answer

Answer 1

A		Unit Sales
	Territory E	50000
	Territory W	100000
	Total Sales in Units	150000
	Per unit Price	25
	Total Sales Revenue ($)	3750000
B
	Sales Units	150000
	Desired Ending Inventory	6500
	Beginning Inventory	-6000
	Units to be Produced	150500
C
	Material Required for Finished Goods	376250
	Desired Ending Inventory of Raw Material	13500
	Beginning Inventory	-12000
	Material to be Purchased (Pounds)	377750
	Material to be Purchased ($)	566625
D
	Number of Units to be Produced	150500
	Labour Hour per unit	0.5
	Total Labour Hours Required	75250
	Labour Cost per Hour	14
	Total Labour Cost ($)	1053500
E
	Total Labour Hours Required	75250
	Variable Manufaturing Overhead ($)	75250
	Fixed Manufaturing Overhead ($)	45000
	Total Manufaturing Overhead ($)	120250