Question

NEED ANSWER OF THE " F " PART ONLY!

39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead. Sports Bars Inc., produces energy bars and sells them by the case (1 unit - 1 case). Information to be used for the operating budget this coming year follows: Average sales price for each case is estimated to be $25. Unit sales for this coming year, ending December 31, are expected to be as follows First quarter 80,ooo Second quarter 84,0o0 Third quarter 88,000 Fourth quarter 97,000 Finished goods inventory is maintained at a level equal to 15 percent of the next quarter's sales. Finished goods inventory at the end of the fourth quarter budget period is estimated to be 13,00o units Each unit of product requires 5 pounds of direct materials, at a cost of $3 per pound. Management prefers to maintain ending raw materials inventory equal to 10 percent of next quarter's materials needed in production. Raw materials inventory at the end of the fourth quarter budget period is estimated to be 43,00o pounds. Each unit of product requires o.10 direct labor hours at a cost of $14 per hour Variable manufacturing overhead costs are . . Indirect materials Indirect labor Other $0.20 per unit $0.15 per unit $0.10 per unit Fixed manufacturing overhead costs per quarter are $80,000 Salaries Other $70,000 Depreciation $55,625 Required: a. Prepare a sales budget using the format shown in Figure 9.3 b. Prepare a production budget using the format shown in Figure 9.4 c. Prepare a direct materials purchases budget using the format shown in Figure 9.5 d. Prepare a direct labor budget using the format shown in Figure 9.6 e. Prepare a manufacturing overhead budget using the format shown in Figure 9.7. Round to the nearest dollar f. As the production manager, what concerns, if any, do you have about production requirements for each of the four quarters? PROBLEMS (continued) 39. Budgeting for Sales, Production, Direct Materials, Direct Labor, and Manufacturing Overhead (continued) f. The production budget shows the following trend in production from one quarter to the next: Fourth First Second Third Quarter QuarterOuart rQuarter

Answer 1

	First Quarter	Second Quarter	Third quarter	Fourth Quarter
Required producton	79400	83400	86650	98550

Main objective of production department is to make sure that required units are produced on time. The production manager may not have much concern in 1st, 2nd and 3rd quarter as production is increasing at a steady rate. However, it may be concerned for 4th quarter as production is increased by 11900 units and it may be difficult to increase production by such units.