e. Manufacturing Overhead Budget Sales Revenue The Eastern Technology Company manufactures Weather Radios for sale to retailers such as Wal-Mart, Target, etc. The 2016 quarterly unit sales estimates and projected sales prices per unit areas follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales units 9,200 9,300 9,500 9,400 Price per unit $90 $90 $90 $90 Also, note that that projected sales (and projected production) for Quarter 1 of 2017 is 10,000 units Product Cost Assumptions The company's product requires two raw materials, resistors and switches. Cost parameters are as follows: Number of Components/Unit Switches @ $4/switch Resistors @ $8/switch Number of minutes required to complete finished unit Direct labor minutes per unit Machine minutes per unit 30 12 Hour rates used Direct labor rate= $10/hour Manufacturing overhead rates (I.e., the PDOHRS to use to apply overhead) Labor-related= $25/hour Machine-related= $40/hour Eastern applies manufacturing overhead using two cost drivers: direct-labor hours and machine hours. Ending Inventories The desired ending inventories for each of the two direct materials is 10% of the next quarter's respective amount of direct materials needed for production. The desired finished goods ending inventory is 5% of the next quarter's budgeted sales units. Beginning inventory for direct materials and finished goods are assumed to be zero as of 1/1/2016.
e. Manufacturing Overhead Budget Sales Revenue The Eastern Technology Company manufactures Weather Radios for sale to retailers such as Wal-Mart, Target, etc. The 2016 quarterly unit sales estimates and projected sales prices per unit areas follows: Quarter 1 Quarter 2 Quarter 3 Quarter 4 Sales units 9,200 9,300 9,500 9,400 Price per unit $90 $90 $90 $90 Also, note that that projected sales (and projected production) for Quarter 1 of 2017 is 10,000 units Product Cost Assumptions The company's product requires two raw materials, resistors and switches. Cost parameters are as follows: Number of Components/Unit Switches @ $4/switch Resistors @ $8/switch Number of minutes required to complete finished unit Direct labor minutes per unit Machine minutes per unit 30 12 Hour rates used Direct labor rate= $10/hour Manufacturing overhead rates (I.e., the PDOHRS to use to apply overhead) Labor-related= $25/hour Machine-related= $40/hour Eastern applies manufacturing overhead using two cost drivers: direct-labor hours and machine hours. Ending Inventories The desired ending inventories for each of the two direct materials is 10% of the next quarter's respective amount of direct materials needed for production. The desired finished goods ending inventory is 5% of the next quarter's budgeted sales units. Beginning inventory for direct materials and finished goods are assumed to be zero as of 1/1/2016.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Concept explainers
Master Budget
A master budget can be defined as an estimation of the revenue earned or expenses incurred over a specified period of time in the future and it is generally prepared on a periodic basis which can be either monthly, quarterly, half-yearly, or annually. It helps a business, an organization, or even an individual to manage the money effectively. A budget also helps in monitoring the performance of the people in the organization and helps in better decision-making.
Sales Budget and Selling
A budget is a financial plan designed by an undertaking for a definite period in future which acts as a major contributor towards enhancing the financial success of the business undertaking. The budget generally takes into account both current and future income and expenses.
Question
Transcribed Image Text:e)
Manufacturing Overhead Budget
Labor-related rate per hour
DL hours required
Labor-related OH cost
Machine-related rate per hour
Machine hours required
Machine-related OH cost
2$
Total OH costs
$
OH Cost per unit produced
Total Product Cost per Unit
$
$
$
$
$
Cost of Goods Sold
Transcribed Image Text:e. Manufacturing Overhead Budget
Sales Revenue
The Eastern Technology Company manufactures Weather Radios for sale to retailers such as Wal-Mart, Target, etc.
The 2016 quarterly unit sales estimates and projected sales prices per unit areas follows:
Quarter 1
Quarter 2
Quarter 3
Quarter 4
Sales units
9,200
9,300
9,500
9,400
Price per unit
$90
$90
$90
$90
Also, note that that projected sales (and projected production) for Quarter 1 of 2017 is 10,000 units
Product Cost Assumptions
The company's product requires two raw materials, resistors and switches. Cost parameters are as follows:
Number of Components/Unit
Switches @ $4/switch
3
Resistors @ $8/switch
2
Number of minutes required to complete finished unit
Direct labor minutes per unit
Machine minutes per unit
30
12
Hour rates used
Direct labor rate= $10/hour
Manufacturing overhead rates (i.e., the
PDOHRS to use to apply overhead)
Labor-related= $25/hour
Machine-related= $40/hour
Eastern applies manufacturing overhead using two cost drivers: direct-labor hours and machine hours.
Ending Inventories
The desired ending inventories for each of the two direct materials is 10% of the next quarter's respective amount of direct materials needed for production. The desired finished goods ending inventory is 5% of the next quarter's budgeted sales
units. Beginning inventory for direct materials and finished goods are assumed to be zero as of 1/1/2016.
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