Question

1. Operating Budgets (50 points) Lubriderm Corporation has the following budgeted unit sales for the next six-month period: Month June July August September October November Unit Sales 90,000 120,000 210,000 150,000 180,000 120,000 There were 30,000 units of finished goods in inventory at the beginning of June. Plans are to have an inventory of finished products that equal 20% of the unit sales for the next month. Five pounds of materials are required for each unit produced. Each pound of material costs $8. Inventory levels for materials are equal to 30% of the needs for the next month. Materials inventory on June 1 was 15,000 pounds. Direct labor hours required for each unit are 1.5. The wage rate is $18 per direct labor hour. Both fixed and variable overhead are allocated to units produced using direct labor hours. The variable overhead rate is $5 per direct labor hour. Fixed overhead is budgeted for $1,566,000 for the year. Total budgeted direct labor hours for the year are 2,610,000. a. Prepare production budgets in units for July, August, and September and the third quarter in total. b. Prepare a purchases budget in pounds for July, August, and September and the third quarter in total, and give total purchases in both pounds and dollars for each month and the third quarter in total. c. Prepare a direct labor budget for July, August and September and the third quarter in total. d. Prepare an overhead budget for July, August and September and the third quarter in total. e. Prepare cost of goods sold budget for the third quarter.

Answer 1

Cost of Goods sold Budget (3rd Quarte) = • Opening Material (738000x5) 36,90,000 +) Poscheses 2,00, 40,000 1, 32, 84,000 36,90,000 +) Direct Labours +) Vanable overheads +) fixed overheads -) Closing material 17,83,000x5) 4,42, 000 (34,15,000) COGS 3,72,31,000

Diversity and inclusion matters | Production CUALCULULLAH in units) Month sales / Opening I closing muentory Inventory (A) 0 1 July 1,20,000 24,000* 42,000** August 2,10,000 42,000 30,000 Sept 1,50,000 30,000 36,000 16) o K (A-B+6) 1, 38.000 1,98,000 1,56,000 Total 4,80,000 96.000 108,000 1492,000 * July opening inventory June's closing inventory - 20% of July's Sales e dot. of 1,90,000 = 24,000 42,000 5 ** July closing inventory 20% of August's sales ", 204 of 2, 10,000 2 Same goes for August 28 September O#OA HOA NOA

month in units) (in Hos) Production | Labour Hours B- (AX1.5) | Labour Hours C = (B x18) 3 July 1,38,000 2,07,000 37,26,000 Alefest 1,48,000 2,97,000 53,46,000 september 1,56,000 2,34,000 49,12,000 Total 4,92,000 17,38,000 11,32,84,000

Diversity and inclusion matters Variable overhead total = 5x labour hours of zod Quarter -5X 7, 38,000 #36,90,000 fixed overhead Budgeted Houls (for the year) = 26,10,000 Budgeted fixed overheads (Year) - $ 15,66,000 Hours worked (in 3rd Qupsfe): 7, 38,000 fixed rechead for 300 Questa - 15,66,000 x 7,38000 26,10,000 $4,49,800 OⓇO AOXO AOÑO A