Question

Wesley Power Tools manufactures a wide variety of tools and accessories. One of its more popular items is a cordless power handisaw. Each handisaw sells for $66. Wesley expects the following unit sales: January February March April May 5,800 6,000 6,500 6,300 5,700 Wesley's ending finished goods inventory policy is 20 percent of the next month's sales. Suppose each handisaw takes approximately.75 hours to manufacture, and Wesley pays an average labor wage of $28 per hour. Each handisaw requires a plastic housing that Wesley purchases from a supplier at a cost of $8.00 each. The company has an ending raw materials inventory policy of 25 percent of the following month's production requirements. Materials other than the housing unit total $4.50 per handisaw. Manufacturing overhead for this product includes $72,000 annual fixed overhead (based on production of 27,000 units) and $1.20 per unit variable manufacturing overhead. Wesley's selling expenses are 7 percent of sales dollars, and administrative expenses are fixed at $18,000 per month. Required: 1. Compute the following for the first quarter: (Do not round your intermediate calculations.) January February March 1st Quarter total 2. 3. 4. Budgeted Sales Revenue Budgeted Production in Units Budgeted Cost of Raw Material Purchases for the Plastic Housings Budgeted Direct Labor Cost

Answer 1

Solutions:

Уи AK 3 Particulars 5 Expected sales units 6 Selling price per unit 7 Budgeted Sales Revenue Budgeted Sales Revenue - Wesley Power January February 5800 6000 $66.00 $66.00 $382,800 $396,000 March 6500 $66.00 $429,000 1st Quarter Total 18300 $66.00 $1,207,800 10 11 Production Budget in Units - Wesley Power Tool 12 Particulars January Feburary 13 Expected sales units 5800 6000 14 Add: ending inventory (20% of next month sales) 1200 1300 15 Less: Beginning inventory 11601 1200 16 17 Estimated production in units 5840 6100 March 1st Quarter Total 6500 18300 1260 1260 1300 1160 6460 18400 Budgeted Cost of raw material purchases of Plastic Housings - Wesley Power Tool Particulars January Feburary March 1st Quarter Total 22 Budgeted Production units 5840 6100 6460 18400 23 Plastic housing per unit 1 1 1 24 Estimated consumption of Plastic Housings 5840 6100 6460 18400 25 Add: ending inventory (25% of next month's needs) 1525 1615 1545 1545 26 Less: Beginning inventory 1460 1525 1615 1460 27 28 Budgeted purchase units of Plastic housing 5905 6190 6390 18485 29 Cost per unit of Plastic housing $8.00 $8.00 $8.00 $8.00 30 31 Budgeted cost of raw material purchases $47,240.00 $49,520.00 $51,120.00 $147,880.00 32 33 Budgeted Direct labor cost - Wesely Power Tool 34 Particulars January Feburary March 1st Quarter Total 35 Budgeted Production units 5840 6100 6460 18400 36 Direct labor hours per unit 0.75 0.75 0.75 0.75 37 Budgeted direct labor hours 4380 4575 13800 38 direct labor cost per hour $28.00 $28.00 $28.00 $28.00 39 40 Budgeted direct labor cost $122,640.00 $128,100.00 $135,660.00 $386,400.00 41 4845 3) Sheet230 (8) Sheet599 Sheet603 Sheet604 ) She