Question

I would like to cross check my answer to the following question which i did to enhance my understanding:

Power Inc. is a manufacturing company. It manufactures 2 products, known as ‘A’ and ‘B’. The following information is given for the year 2019: -

The standard direct materials and direct labor used for each product is as follows:

                                                                                                    ‘A’                               ‘B’

Material 1                                                                               10 units                       8 units

Material 2                                                                               5 units                         9 units

Direct Labor                                                                            10 hours                    15 hours

Standard direct materials and direct labor costs:

                                                                                                      (USD)

Material 1                                                                               8.20 per unit

Material 2                                                                               17.00 per unit

Direct Labor                                                                            14.00 per hour

Other important data is as follows for the year 2019:

                                                                                                                Direct materials

                                                                                                Material 1       Material 2

Opening inventory (units)                                                       9,000             8,500

Closing inventory required (units)                                          10,000             2,000

                                                                                                   Finished products

                                                                                                ‘A’                    ‘B’

Forecast sales (units)                                                              8,500               1,600

Selling price per unit                                                              USD500           USD660

Ending inventory required (units)                                           2,000                  100

Beginning inventory (units)                                                       200                    90

Required:

Prepare the following budgets for the year 2019: -

1. Sales budget                                                                                                                                   
2. Production budget                                                                                                                          
3. Direct material usage budget                                                                                                          
4. Direct material (purchase budget)                                                                                        
5. Direct labor budget                                                                                                            

Answer 1

Sales budget
		Product A	Product B	Total
	Forecast sales (units)	8,500	1,600
Multiply:	Selling price per unit	$                    500	$                660
	Sale revenues	$        4,250,000	$    1,056,000	$      5,306,000
Production budget
		Product A	Product B
	Forecast sales (units)	8,500	1,600
Add:	Ending inventory required (units)	2,000	100
	Units available for sale	10,500	1,700
Less:	Beginning inventory (units)	200	90
	Units produced	10,300	1,610
Direct material usage budget
		Material 1	Material 2
	Units produced	10,300	10,300
Multiply:	Units required per units of product A	10	5
	Material required for product A	103,000	51,500
	Units produced	1,610	1,610
Multiply:	Units required per units of product B	8	9
	Material required for product B	12,880	14,490
	Material required for product A	103,000	51,500
Add:	Material required for product B	12,880	14,490
	Total Material required or Direct material usage	115,880	65,990
Direct material (purchase budget)
		Material 1	Material 2	Total
	Total Material required	115,880	65,990
Add:	Closing inventory required (units)	10,000	2,000
	Material needed	125,880	67,990
Less:	Opening inventory (units)	9,000	8,500
	Direct material purchased	116,880	59,490
Multiply:	Material price per unit	$                   8.20	$            17.00
	Cost of material purchased	$            958,416	$    1,011,330	$      1,969,746
Direct labor budget
		Product A	Product B	Total
	Unit produced	10,300	1,610
Multiply:	Hour per unit	10	15
	Total Hour need	103,000	24,150	127,150
Multiply:	Labour rate per hour	$                14.00	$            14.00	$              14.00
	Direct labor cost	$        1,442,000	$       338,100	$      1,780,100