Sales, Production, and Purchases Budgets; Activity Based Overhead Budget
Vista Electronics, Inc. manufactures two different types of coils used in electric motors. In the fall of the current year. Erica Becker, the controller, compiled the following data.
• Sales forecast fur 20x0 (all units to be shipped in 20x0)
Product | Units | Price |
Light coil | 60,000 | $120 |
Heavy coil | 40,000 | 170 |
• Raw-material prices and inventory levels:
Raw Material | Expected Inventories, January 1, 20x0 | Desired Inventories, December 31, 20x0 | Anticipated Purchase Price |
Sheet metal | 32,000 lb. | 36,000 lb. | $8 |
Copper wire | 29,000 lb. | 32,000lb. | 5 |
Platforms | 6,000 units | 7,000 units | 3 |
• Use of raw material:
Amount Used per Unit | ||
Raw Material | Light Coil | Heavy Coil |
Sheet metal | 4 lb | 5 lb. |
Copper wire | 2 lb | 3 lb. |
Platforms | 1 unit | |
• Direct-labor requirements and rates:
Product | Hours per Unit | Rate per Hour |
Light coil | 2 | $15 |
Heavy coil | 3 | 20 |
• Finished-goods inventories (in units):
Product | Expected January 1, 20x0 | Desired December 31, 20x0 |
Light coil | 20,000 | 25,000 |
Heavy coil | 8,000 | 9,000 |
• Manufacturing overhead:
OverheadCostItem | Activity-BasedBudget Rate |
Purchasing and material handling | $.25 per pound of sheet metal and copper wire purchased |
Depreciation, utilities. and inspection | $4.00per coil produced(either type) |
Shipping | $1.00per coil shipped(either type) |
General manufacturing overhead | $3.00per direct-labor hour |
Required: Prepare the following budgets for 20x0.
1. Sales budget (in dollars).
2. Production budget (in units),
3. Raw-material purchases budget (in quantities).
4. Raw-material purchases budget (in dollars).
5. Direct-labor budget (in dollars).
6. Manufacturing-overhead budget (in dollars).
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