Quarter 1 Quarter 2 Quarter 3 Quarter 4
1,000 kayaks 1,500 kayaks 750 kayaks 750 kayaks
Current Designs’ policy is to have finished goods ending inventory in a quarter equal to 20% of the next quarter’s anticipated sales. Preliminary sales projections for 2021 are 1,100 units for the first quarter and 1,500 units for the second quarter. Ending inventory of finished goods at December 31, 2019, will be 200 rotomolded kayaks.
Production of each kayak requires 54 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc). Company policy is that the ending inventory of polyethylene powder should be 25% of the amount needed for production in the next quarter. Assume that the ending inventory of polyethylene powder on December 31, 2020, is 14,850 pounds. The finishing kits can be assembled as they are needed. As a result, Current Designs does not maintain a significant inventory of the finishing kits.
The polyethylene powder used in these kayaks costs $1.50 per pound, and the finishing kits cost $170 each. Production of a single kayak requires 2 hours of time by more experienced, type I employees and 3 hours of finishing time by type II employees. The type I employees are paid $15 per hour, and the type II employees are paid $12 per hour.
Selling and administrative expenses for this line are expected to be $45 per unit sold plus $7,500 per quarter. Manufacturing overhead is assigned at 150% of labor costs.
Instructions
Prepare the production budget, direct materials budget, direct labor budget, manufacturing overhead budget, and selling and administrative budget for this product line by quarter and in total for 2020.
Production Budget
For the year ended 31st december 2017
Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | Total | |
Expected Unit Sales | 1000 | 1500 | 750 | 750 | 4000 |
Add: desired ending finished goods units | 300 | 150 | 150 | 220 | 820 |
Total required units | 1300 | 1650 | 900 | 970 | 4820 |
Less: beginning finished goods units | -200 | -300 | -150 | -150 | -800 |
Required production units | 1100 | 1350 | 750 | 820 | 4020 |
DIrect Materials Budget
For the year ended december 31st, 2017
Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | Total | |
Units to be produced | 1100 | 1350 | 750 | 820 | 4020 |
Pounds of Polyethylene powder per unit | 54 | 54 | 54 | 54 | 54 |
Total Pounds needed for production | 59400 | 72900 | 40500 | 44280 | 217080 |
Add: desired ending inventory of powder | 18225 | 10125 | 11070 | 15930 | 55350 |
Total pounds of powder required | 77625 | 83025 | 51570 | 60210 | 272430 |
Less: beginning inventory of powder | -19400 | -18225 | -10125 | -11070 | -58820 |
Pounds of Polyethylene powder to be purchased | 58225 | 64800 | 41445 | 49140 | 213610 |
Cost per pound | 1.5 | 1.5 | 1.5 | 1.5 | 1.5 |
Cost of Polyethylene powder to be purchased | 87337.5 | 97200 | 62167.5 | 73710 | 320415 |
Cost of required finishing kits | 165000 | 202500 | 112500 | 123000 | 603000 |
Total Cost of Direct Materials | 252337.5 | 299700 | 174667.5 | 196710 | 923415 |
*Production finished goods units for Quarter 1, 2018 = 1100 + (20%*1500) - 220 = 1180 units
Raw Material Required = 1180*54 = 63720 pounds
Closing stock for Qtr 4, 2017 = 25% of 63720 = 15930 pounds
Direct Labor Budget
For the year ended december 31st, 2017
Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | Total | |
Units to be produced | 1100 | 1350 | 750 | 820 | 4020 |
No. of hours of more skilled labor/ unit | 2 | 2 | 2 | 2 | 2 |
Total no. of more skilled labor | 2200 | 2700 | 1500 | 1640 | 8040 |
Hourly rate for more skilled labor | 15 | 15 | 15 | 15 | 15 |
Total Cost of more skilled labor | 33000 | 40500 | 22500 | 24600 | 120600 |
Units to be produced | 1100 | 1350 | 750 | 820 | 4020 |
No. of hours of less skilled labor/ unit | 3 | 3 | 3 | 3 | 3 |
Total no. of less skilled labor | 3300 | 4050 | 2250 | 2460 | 12060 |
Hourly rate for less skilled labor | 12 | 12 | 12 | 12 | 12 |
Total Cost of less skilled labor | 39600 | 48600 | 27000 | 29520 | 144720 |
Total Cost for Direct Labor | 72600 | 89100 | 49500 | 54120 | 265320 |
Manufacturing Overhead Budget
For the year ended 31st december 2017
Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | Total | |
Total Cost for Direct Labor | 72600 | 89100 | 49500 | 54120 | 265320 |
Manufacturing overhead rate per direct labor dollar | 150% | 150% | 150% | 150% | 150% |
Manufacturing overhead cost | 108900 | 133650 | 74250 | 81180 | 397980 |
Selling and administrative budget
for the year ended 31st dec, 2017
Qtr 1 | Qtr 2 | Qtr 3 | Qtr 4 | Total | |
Expected Sales Units | 1000 | 1500 | 750 | 750 | 4000 |
Variable selling and administrative costs @ $45 per unit | 45000 | 67500 | 33750 | 33750 | 18000 |
Fixed selling and administrative cost | 7500 | 7500 | 7500 | 7500 | 30000 |
Total Selling and administrative cost | 52500 | 75000 | 41250 | 41250 | 48000 |
Diane Buswell is preparing the 2020 budget for one of Current Designs’ rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the following unit sales projections for 2020.
Quarter 1 Quarter 2 Quarter 3 Quarter 41,000 kayaks 1,500 kayaks 750 kayaks 750 kayaksCurrent Designs’ policy is to have finished goods ending inventory in a quarter equal to 20% of the next quarter’s anticipated sales. Preliminary sales projections for 2014 are 1,100 units for the first quarter and 1,500 units for the second quarter. Ending inventory of finished goods at December 31, 2012, will be 200 rotomolded kayaks.Production of each kayak requires 54 pounds of polyethylene powder and a...
Current Designs CD9 Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded Extensive meetings with members of the sales department and executive team have resulted in the lowing unit sales projections for 2020. Quarter 1 1,000 kayaks Quarter 2 1,500 kayaks Quarter 3 750 kayaks Quarter 4 750 kayaks Current Designs' policy is to have finished goods ending inventory in a quarter equal to 20% of the next quarter's anticipated sales. Preliminary sales projections for 2021...
Current Designs CD9 Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded Extensive meetings with members of the sales department and executive team have resulted in the lowing unit sales projections for 2020. Quarter 1 1,000 kayaks Quarter 2 1,500 kayaks Quarter 3 750 kayaks Quarter 4 750 kayaks Current Designs' policy is to have finished goods ending inventory in a quarter equal to 20% of the next quarter's anticipated sales. Preliminary sales projections for 2021...
ašes Current Designs Excel CD9 Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have resulted in the fol- lowing unit sales projections for 2020 1,000 kayaks 1,500 kayaks 750 kayaks 750 kayaks Quarter Quarter 2 Quarter 3 Quarter 4 Current Designs' policy is to have finished goods ending inventory in a quarter equal to 20 % of the next quarter's anticipated sales. Preliminary...
Diane Buswell is preparing the 2020 budget for one of Current Designs' rotomolded kayaks. Extensive meetings with members of the sales department and executive team have Quarter 1 Quarter 2 Quarter 3 Quarter 4 1,900 kayaks 2,600 kayaks 1,550 kayaks 1,550 kayaks Current Designs' polRY to have finished goods ending inventory in a quarter equal to 15% of the next quarter's anticipated sales, preliminary sales project ons for 2021 are 1,100 units for the first quarter and 2,600 units for...
Quarter 11,200 kayaksQuarter 21,500 kayaksQuarter 3750 kayaksQuarter 4700 kayaksKK’s policy is to have finished goods ending inventory in a quarter equal to 20% of the next quarter's anticipated sales. Preliminary sales projections for 2022 are 1,100 units for the first quarter and 1,500 units for the second quarter. Ending inventory of finished goods at December 31, 2020, will be 200 kayaks. Production of each kayak requires 54 pounds of polyethylene powder and a finishing kit (rope, seat, hardware, etc.). Company policy...
Diane Buswell examined some of the accounting records and reported that Current Designs purchased 1,200 pounds of pellets for this order at a total cost of $2,040.20 finishing kits were assembled at a total cost of $3,240. The payroll records showed that the type I employees worked 38 hours on this project at a total cost of $570. The type II finishing employees worked 65 hours at a total cost of $796.25. A total of 20 kayaks were produced for...
Decision Making 12-1 The executive team at Current Designs has gathered to evaluate the company’s operations for the last month. One of the topics on the agenda is a special order to produce a batch of 20 kayaks for a client. Mike Cichanowski asked the others if the special order caused any particular problems in the production process. Dave Thill, the production manager, made the following comments: “Since we wanted to complete this order quickly and make a good first...
4 А в 1 CD2 - Excel Tutorial 3 CURRENT DESIGNS 4) Juegel Hollow Resort has ordered 20 rotomolded kayaks from Current Designs. Each kayak will be formed in 5 the rotomolded oven, cooled, and then the excess plastic trimmed away. Then, the hatches, seat, ropes, and tungees 6 will be attached to the kayak. 7 Dave Thill, the kayak plant manager, knows that manufacturing each kayak requires 54 pounds of polyethylene 8 powder and a finishing kit (rope, seat,...
Garver Industries has budgeted the following unit sales: 2020 January February March April May Units 10,000 8,000 9,000 11,000 15,000 The finished goods units on hand on December 31, 2019, was 2,000 units. Each unit requires 3 pounds of raw materials that are estimated to cost an average of $4 per pound. It is the company's policy to maintain a finished goods inventory at the end of each month equal to 20% of next month's anticipated sales. They also have...