Question

PR 21-3B Budgeted income statement and supporting budgets Obj. 4 4. Total direct labor cost in Assembly Dept. The budget director of Gold Medal Athletic Co., with the assistance of the controller, treasurer production manager, and sales manager, has gathered the following data for use in developing the budgeted income statement for March: A. Estimated sales for March: $171,766 Batting helmet.... 1,200 units at $40 per unit 6,500 units at $160 per unit EXCEL TEMPLATE Football helmet B. Estimated inventories at March 1: Direct materials: Finished products: Batting helmet.... 90 lbs. Plastic 40 units at $25 per unit Foam lining.. 80 lbs Football helmet. 240 units at $77 per unit C. Desired inventories at March 31: Finished products: Batting helmet.. Direct materials: 50 lbs S0 units at $25 per unit Plastic Foam lining... 65 lbs. Football helmet... 220 units at $78 per unit D. Direct materials used in production: In manufacture of batting helmet Plastic..... Foam lining.. . 1.2 lbs. per unit of product 0.5 lb. per unit of product In manufacture of football helmet: 3.5 lbs. per unit of product Plastic. 1.5 lbs. per unit of product Foam lining... E. Anticipated cost of purchases and beginning and ending inventory of direct materials: $6 per lb. $4 per lb. Plastic.. Foam lining F. Direct labor requirements: Batting helmet: Molding Department. Assembly Department. 0.2 hr. at $20 per hr. 0.5 hr. at $14 per hr. Football helmet: 0.5 hr. at $20 per hr. 1.8 hrs. at $14 per hr. Molding Department. Assembly Department. (Com

Answer 1

Ans(1): Computation of Budgeted Sales for March are as follow:

PARTICULARS Batting Helmets Football Helmet $ Total $1,088,000 Estimated Sales $ 48,000 $ 1,040,000 (1200 x $40)(6500 x $160)

Ans(2): Computation of Production budget for march are as follow:

The formula to calculate Production are as follow:

Production = Estimate Sales + Ending Inventory of Finished Goods - Beginning Inventory of Finished Goods

The values given in the question are:

Ending Inventory:

Batting Helmet = 50 units x $25 =$1,250

Football Helmet = 220 units x $78 =$17,160

Beginning Inventory:

Batting Helmet = 40 units x $25 =$1,000

Football Helmet = 240 units x $77 =$18,480

Estimate Sales: as computed above

using the values given,

PARTICULARS (A) (B) Estimated Sales Inventories at March 31 Total Inventories at March 1 Budgeted Production Betting Batting Helmet Helmet $ Units 1200 $ 48,000 50 $ 1,250 1250 $ 49,250 (40.00) $ (1,000) 1210 $ 48,250 Football Football Total Helmet Helmet $ (A+B) Units 6,500 $ 1,040,000 $ 1,088,000 220 $ 17,160 $ 18,410 6,720 $ 1,057,160 $ 1,106,410 (240) $ (18,480) $ (19,480) 6,480 $ 1,038,680 $ 1,086,930

Ans(3): Computation of Direct Material Purchase for the month of March are as follow:

Formula to calculate Direct Material Purchase are as follow:

Beginning Inventories + Purchase - Ending Inventories = Direct Material Used

therefore,

Purchase = Direct Material Consumption + Ending Inventories - Beginning Inventories

The values given in the question are:

Direct Material Used for:

1. Batting Helmet

Plastic : 1.2 lbs x 1210 units =1,452 lb x $6 = $8,712

Foam lining : 0.5 lb x 1210 = 605 lbs x $4 = $2,420

2. Football Helmet

Plastic : 3.5 lb x 6,480 = 22,680 lbs x $6 =$136,080

Foam lining : 1.5 lb x 6,480 = 9,720 lbs x $4= $38,880

Therefore, Total Plastic used =$8,712 + $136,080 = $144,792

Total Foam lining = $2,420 + $38,880 = $41,300

Ending Inventory for:

Plastic : 50 lbs x $6 = $300

Foam lining : 65 lbs x $4 = $260

Beginning Inventory for:

Plastic : 90 lbs x $6 = $540

Foam lining : 80 lbs x $4 = $320

using the values given,

PARTICULARS Plastic Units Plastic $ (A) (B) Direct Material Used 24132 $ 144,792 Inventories at March 31 50 $ 300 Total 24182 $ 145,092 Inventories at March 11 (90) $ (540)| Purchase 24092 $144,552 Foam Foam Total Lining Lining $ (A+B) Units 10,325 | $ 41,300 $186,092 260 $ 260 $ 560 10,585 $ 41,560 $ 186,652 (320) $ (320) $ (860) 10,265 $ 41,240 | $185,792 |

Ans(4) Computation of Direct Labor cost budget for the month of March are as follow:

PARTICULARS Batting Helmet $ (A) Football Helmet $ (B) Total (A+B) Molding Department 69,640 $ 4,840 $ 64,800 $ (0.20 hr x $20=$4 (0.50 hr x $20=$10 per unit) so for per unit) so for (1,210 Unit x$4) (6,480 Unit x$10) $ 8,470 $ 163,296 $ Assembly Department 171,766 |(1,210 Unit x$7) 116.480 Unit - 228,096 5 241,406 (0.50 hr x $14=$7 per unit) so for (1,210 Unit x$7) $ 13,310 (1.80 hr x $14=$25.2 per unit) so for (6,480 Unit x$25.2) $ Total