Question

Spring Manufacturing Company makes two components identified as C12 and D57. Selected budgetary data for 2019 follow: Finished Components C12 D57 10 pounds 8 pounds 4 pounds 1 pound 3 hours 2 pounds 2 hours Requirements for each finished component: RM 1 RM 2 RM 3 Direct labor Product information: Sales price Sales (units) Estimated beginning inventory (units) Desired ending inventory (units) $ 160 12,000 370 300 $ 190 12,000 190 200 Direct Materials Information RM1RM2 RM3 5 $ 1.50 $ 0.50 3,400 2,000 700 3,500 1,000 2,000 $ Cost per pound Estimated beginning inventory in pounds Desired ending inventory in pounds The firm expects the average wage rate to be $25 per hour in 2019. Spring Manufacturing uses direct labor hours to apply overhead. Each year the firm determines the overhead application rate for the year based on budgeted direct labor hours for the year. The firm maintains negligible Work-in-Process Inventory and expects the cost per unit for both beginning and ending inventories of finished products to be identical. Indirect materials-variable Miscellaneous supplies and tools-variable Indirect labor-variable Supervision-fixed Payroll taxes and fringe benefits-variable Maintenance costs-fixed Maintenance costs-variable Depreciation-fixed Heat, light, and power-fixed Heat, light, and power-variable Total Factory Overhead Information $ 15,000 4,500 40,000 90,000 300,000 21,000 10,070 71,340 43,430 10,000 $ 605,340

Answer 1

Req. 1 prepare sales budget as follows:

Spring Manufacturing Company
Sales Budget
For the Year 2019
	C12	D57	Total
Sales in (units)	12000	12000	24000
Selling price per unit	$160	$190
Total sales revenue	$1,920,000	$2,280,000	4200000

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Req. 2 Prepare the production budget as follows:

Spring Manufacturing Company
Production Budget
For the Year 2019
	C12	D57
Budgeted Sales in (units)	12000	12000
Add: Desired Ending inventory of Finished units	300	200
Total units needed	12300	12200
Less: Beginning inventory of finished units	370	190
Budgeted production units	11930	12010

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Req. 3 Prepare the direct material purchase budget:

Spring Manufacturing Company
Direct material purchases budget (units and dollars)
For the Year 2019
	C12	D57	Total
Raw material (RM) 1:
Budgeted production	11930	12010	23940
Pounds of RM per unit
RM1	10	8	18
RM2	0	4	4
RM3	2	1	3
RM needed (lbs)
RM1	119300	96080	215380
RM2	0	48040	48040
RM3	23860	12010	35870
Total pound of RM needed	143160	156130	299290
RM1:
Budgeted production	11930	12010	23940
Pound per unit	10	8
	119300	96080	215380
Add: Desired ending inventory			3500
Total RM1 needed			218880
Less: Beginning inventory			3400
Required purchase or RM1			215480
Cost per pound			$5
Budgeted purchase RM1			$1,077,400
RM2:
Budgeted production	11930	12010	23940
Pound per unit	0	4
	0	48040	48040
Add: Desired ending inventory			1000
Total RM1 needed			49040
Less: Beginning inventory			2000
Required purchase or RM2			47040
Cost per pound			$1.5
Budgeted purchase RM2			$70,560
RM3:
Budgeted production	11930	12010	23940
Pound per unit	2	1
	23860	12010	35870
Add: Desired ending inventory			2000
Total RM1 needed			37870
Less: Beginning inventory			700
Required purchase or RM3			37170
Cost per pound			$0.5
Budgeted purchase RM3			$18,585

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Req. 4 Prepare Direct labor budget:

Spring Manufacturing Company
Direct labor budget
For the Year 2019
	C12	D57
Units to be produced	11930	12010
Labor hours per unit	2	3
Total labor hours	23860	36030
Rate per hour	$25	$25
Total labor cost	$596,500	$900,750

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Req. 5 Prepare Factory overhead budget:

Spring Manufacturing Company
Factory overhead budget
For the Year 2019
Variable overhead
Indirect material	$15,000
Misc supplies and tools	$4,500
Indirect labor	$40,000
Payroll taxes fringe benefits	$300,000
Maintenance cost	$10,070
Heat light and power	$10,000	$379,570
Fixed Overhead
Supervision	$90,000
Maintenance cost	$21,000
Heat light and power	$43,430
Total cash fixed factory		$154,430
Depreciation		$71,340
Total budgeted factory overhead		$605,340

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As per guidelines 4 subparts should be answered. Thank you!