Question

Sales Forecast & Product Budget table numbers (units)

April: Budget (880 units) & Sales (805 units)

may: Budget (1,100 units) & Sales (900 units)

june: Budget (1075) & Sales (1025 units)

july : budget (1125 units) & sales (875 units)

Delray Manufacturing needs to better budget and analyze costs. While Delray has experienced high sales growth, it has struggled to effectively manage costs and inventories. Delray aims to end each month with direct materials inventory equal to 40% of next month's production needs. Each finished unit requires 4 pounds of direct materials and 2 hours of direct labor. Delray budgets $12,000 of fixed overhead costs per month. A Tableau Dashboard is provided to aid our analysis. Sales Forecast & Production Budget (in Units) 1,500 Budgeted Production Sales Forecast 1,200..... .......... Budgeted Production 900 Sales Forecast July April

Answer 1

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Delray Manufacturing
Labor Budget	April	May	June	Note
Budgeted Production (units)	880.00	1,100.00	1,075.00	A
Direct Labor hour per unit	2.00	2.00	2.00	B
Totals Labor hours needed	1,760.00	2,200.00	2,150.00	C=A*B
Direct Labor rate per hour	18.00	18.00	18.00	D
Budgeted Direct Labor cost	31,680.00	39,600.00	38,700.00	E=C*D
Factory Overhead Budget	April	May	June
Totals Labor hours needed	1,760.00	2,200.00	2,150.00	See C
Variable Factory Overhead rate per direct Labor hour	25.00	25.00	25.00	F
Budgeted Variable Overhead	44,000.00	55,000.00	53,750.00	G=C*F
Budgeted Fixed Overhead	12,000.00	12,000.00	12,000.00	H
Total Budgeted Factory Overhead	56,000.00	67,000.00	65,750.00	I=G+H
Delray Manufacturing
Labor Budget for April	Does Not Hire	Hire
Budgeted Production (units)	880.00	880.00		J
Direct Labor hour per unit	2.00	1.50		K
Totals Labor hours needed	1,760.00	1,320.00		L=J*K
Direct Labor rate per hour	18.00	21.00		M
Budgeted Direct Labor cost	31,680.00	27,720.00		N=L*M
Hiring skilled labor will cost less so it should be done.