Question

Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin

Greiner Company makes and sells high-quality glare filters for microcomputer monitors. John Craven, controller, is responsible for preparing Greiner’s master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer’s share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company’s union contract calls for an increase in direct labor wages that is included in the direct labor rate. Greiner expects to have 6,500 glare filters in inventory on December 31 of the current year, and has a policy of carrying 30 percent of the following month’s projected sales in inventory. Information on the first four months of the coming year is as follows:

	January	February	March	April
Estimated unit sales	37,400	35,400	39,800	40,800
Sales price per unit	$81	$81	$77	$77
Direct labor hours per unit	2.90	2.90	2.50	2.50
Direct labor hourly rate	$19	$19	$21	$21
Direct materials cost per unit	$8	$8	$8	$8

Required:
Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.

1. Prepare the following monthly budgets for Greiner Company for the first quarter of the coming year.

a. Production budget in units:

Greiner Company
Production Budget (units)
For the First Quarter of the Coming Year
	January	February	March	Total
Unit sales
Desired ending inventory
Total units required
Less: Beginning inventory
Units produced

b. Direct labor budget in hours: Round your answers to two decimal places, if required.

Greiner Company
Direct Labor Budget (hours)
For the First Quarter of the Coming Year
	January	February	March	Total
Units produced
Direct labor hours per unit
Total labor budget (hours)

c. Direct materials cost budget:

Greiner Company
Direct Materials Cost Budget
For the First Quarter of the Coming Year
	January	February	March	Total
Units produced
Cost per unit	$	$	$	$
Total direct materials	$	$	$	$

d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.

Greiner Company
Sales Budget (dollars)
For the First Quarter of the Coming Year
	January	February	March	Total
Unit sales
Unit selling price	$	$	$	$
Total sales revenue	$	$	$	$

2. Calculate the total budgeted contribution margin for Greiner Company by month and in total for the first quarter of the coming year. (CMA adapted)

Greiner Company
Budgeted Contribution Margin
For the First Quarter of the Coming Year
	January	February	March	Total
Sales revenue	$	$	$	$
Direct labor cost
Materials cost
Contribution margin	$	$	$	$

Answer 1

Answer: Greiner Company Production Budget (units) For the First Quarter of the Coming Year January February March Unit sales 37400 35400 39800/ Desired ending inventory 10620 11940 12240 Total units required 480201 473401 520401 Less: Beginning inventory 6500 10620 11940 Units produced 41520 367201 40100 Total 112600 12240 124840 6500 118340 Greiner Company Direct Labor Budget (hours) For the First Quarter of the Coming Year January February March Units produced 41520 36720 40100 Direct labor hours per unit 2.90 2.90 2.50 Total labor budget (hours) 120408 106488 100250 Total 118340 327146 Greiner Company Direct Materials Cost Budget For the First Quarter of the Coming Year January February March Total Units produced 41520 36720401001 118340 Cost per unit $ 8.000 $8.00 $8.00 $ 8.00 Total direct materials $332160 $293760 $320800 $946720

Greiner Company Sales Budget (dollars) For the First Quarter of the Coming Year January February March Total 37400 35400 3 9800 112600 $ 81 $81 $ 77 $ 3029400 $ 2867400 $ 3064600 $ 8961400 Unit sales Unit selling price Total sales revenue Greiner Company Budgeted Contribution Margin For the First Quarter of the Coming Year January February March Total $ 3029400 $ 2867400 $ 3064600 $ 8961400 2287752 2023272 21052501 6416274 332160 2 93760 320800 946720 $409488 $ 550368 $ 638550 $ 1598406 Sales revenue Direct labor cost Materials cost Contribution margin