Harmony's company is now in its sixth year of operations. Harmony credits much of her success to her hard-working great-aunt, who taught Harmony the value of planning. Harmony realizes she can't plan For every scenario, but she can plan for the most likely ones. This mindset is essential resource usages For the upcoming period as follows. January February March April Мay June Bugeted Sales Volume 15,000 14,000 13,000 16,000 18,000 20,000 Budgeted Resource Costs $4 Budgeted Resource Usage for One Unit D.3 square yards of fabric 1 linear yard of lightweight rope 5 minutes of direct labor time 6 minutes of machine time 3 per square yard 0.50 per linear yard $ 13 per DL hour 8 per machine hour Addition Information: 1. Budgeted selling price per unit: $10 2. Target ending FG inventory of sling bags: 15% of following month's sales volume 3. Target ending DM inventory of fabric: 20% of following month's production needs 4. Target ending DM inventory of rope: 40% of following month's production needs 5. Budgeted Fixed-MOH costs: Supersiver salaries of $3,000 per mont; Depreciation of $2,500 per month; P aves and insurance of $1. 200 per month
Harmony's company is now in its sixth year of operations. Harmony credits much of her success to her hard-working great-aunt, who taught Harmony the value of planning. Harmony realizes she can't plan For every scenario, but she can plan for the most likely ones. This mindset is essential resource usages For the upcoming period as follows. January February March April Мay June Bugeted Sales Volume 15,000 14,000 13,000 16,000 18,000 20,000 Budgeted Resource Costs $4 Budgeted Resource Usage for One Unit D.3 square yards of fabric 1 linear yard of lightweight rope 5 minutes of direct labor time 6 minutes of machine time 3 per square yard 0.50 per linear yard $ 13 per DL hour 8 per machine hour Addition Information: 1. Budgeted selling price per unit: $10 2. Target ending FG inventory of sling bags: 15% of following month's sales volume 3. Target ending DM inventory of fabric: 20% of following month's production needs 4. Target ending DM inventory of rope: 40% of following month's production needs 5. Budgeted Fixed-MOH costs: Supersiver salaries of $3,000 per mont; Depreciation of $2,500 per month; P aves and insurance of $1. 200 per month
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
Related questions
Question
Transcribed Image Text:Required
A. Prepare the following monthly budgets for the upcoming first quarter for Harmony's sling bag business (present
|quarter totals for each budget, as well)
1. Sales forecast
2. Production budget
3. DM purchases budget for (i) fabric
and (ii) rope
4. DL budget
5. MOH budget
B. By using the most realistic information possible in Harmony's budget how that might affect her employees'
motivation in the meeting the budget (for sales) and in the exceeding the budgets (in the production areas included
above).
C. Explain what other approaches Harmony might use to help generate more buy-in for these budgets.
Transcribed Image Text:Harmony's company is now in its sixth year of operations. Harmony credits much of her success to her
hard-working great-aunt, who taught Harmony the value of planning. Harmony realizes she can't plan
for every scenario, but she can plan for the most likely ones. This mindset is essential resource usages
for the upcoming period as follows.
January February
March
April
Мay
June
Bugeted Sales Volume
15,000
14,000
13,000
16,000
18,000
20,000
Budgeted Resource Usage for One Unit
Budgeted Resource Costs
0.3 square yards of fabric
1 linear yard of lightweight rope
3 per square yard
0.50 per linear yard
$
6 minutes of direct labor time
13 per DL hour
6 minutes of machine time
8 per machine hour
Addition Information:
1. Budgeted selling price per unit: $10
2. Target ending FG inventory of sling bags: 15% of following month's sales volume
3. Target ending DM inventory of fabric: 20% of following month's production needs
4. Target ending DM inventory of rope: 40% of following month's production needs
5. Budgeted Fixed-MOH costs: Supersiver salaries of $3,000 per mont; Depreciation of $2,500 per month; Property
taxes and insurance of $1,200 per month.
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