Lace Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as follows: • Knights, with red blankets and the Knights logo • Raiders, with black blankets and the Raider logo Also, the black blankets are slightly larger than the red blankets. Additional information follows: The budgeted direct-cost inputs for each product in 2013 are as follows: Knights Blanket Raiders Blanket Red wool fabric 4 yards 0 Black wool fabric 0 5 yards Knight logo patches 1 0 Raider Logo patches 0 1 Direct manufacturing labor 3 hours 4 hours Unit data pertaining to the direct materials for March 2013 are as follows: Actual Beginning Direct Materials Inventory (3/1/2013) Knights Blanket Raiders Blanket Red wool fabric 35 yards 0 yards Black wool fabric 0 15 Knight logo patches 45 0 Raider Logo patches 0 60 Target Ending Direct Materials Inventory (3/1/2013) Knights Blanket Raiders Blanket Red wool fabric 25 yards 0 yards Black wool fabric 0 25 Knight logo patches 25 0 Raider Logo patches 0 25 Unit cost data for direct-cost inputs pertaining to February 2013 and March 2013 are as follows: February 2013 (actual) March 2013 (Budgeted) Red wool fabric (per yard) $9 $10 Black wool fabric (per yard) 12 11 Knight logo patches (per patch) 7 7 Raider Logo patches (per patch) 6 8 Manufacturing labor cost per hour 26 27 Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct manufacturing labor-hours per blanket. The budgeted variable manufacturing overhead rate for March 2013 is $16 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2013 is $14,640. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods. Data relating to finished goods inventory for March 2013 are as follows: Knights Blanket Raiders Blanket Beginning inventory in units 12 17 Beginning inventory in dollars (cost) $1,440 $2,550 Target ending inventory in units 22 27 Budgeted sales for March 2013 are 130 units of the Knights blankets and 190 units of the Raiders blankets. The budgeted selling prices per unit in March 2013 are $229 for the Knights blankets and $296 for the Raiders blankets. Assume the following in your answer: • Work-in-process inventories are negligible and ignored. • Direct materials inventory and finished goods inventory are costed using the FIFO method. • Unit costs of direct materials purchased and finished goods are constant in March 2013. REQUIRED 1. Prepare the following budgets for March 2013: a. Direct manufacturing labor budget b. Manufacturing overhead budget c. Ending inventories budget (direct materials and finished goods) d. Cost of goods sold budget
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.
Lace Specialties manufactures, among other things, woolen blankets for the athletic teams of the two local high schools. The company sews the blankets from fabric and sews on a logo patch purchased from the licensed logo store site. The teams are as follows:
|
• |
Knights, with red blankets and the Knights logo |
|
• |
Raiders, with black blankets and the Raider logo |
Also, the black blankets are slightly larger than the red blankets.
Additional information follows:
The budgeted direct-cost inputs for each product in 2013 are as follows:
|
|
Knights Blanket |
Raiders Blanket |
|
Red wool fabric |
4 yards |
0 |
|
Black wool fabric |
0 |
5 yards |
|
Knight logo patches |
1 |
0 |
|
Raider Logo patches |
0 |
1 |
|
Direct manufacturing labor |
3 hours |
4 hours |
Unit data pertaining to the direct materials for March 2013 are as follows:
|
Actual Beginning Direct Materials Inventory (3/1/2013) |
||
|
|
Knights Blanket |
Raiders Blanket |
|
Red wool fabric |
35 yards |
0 yards |
|
Black wool fabric |
0 |
15 |
|
Knight logo patches |
45 |
0 |
|
Raider Logo patches |
0 |
60 |
|
Target Ending Direct Materials Inventory (3/1/2013) |
||
|
|
Knights Blanket |
Raiders Blanket |
|
Red wool fabric |
25 yards |
0 yards |
|
Black wool fabric |
0 |
25 |
|
Knight logo patches |
25 |
0 |
|
Raider Logo patches |
0 |
25 |
Unit cost data for direct-cost inputs pertaining to February 2013 and March 2013 are as follows:
|
|
February 2013 (actual) |
March 2013 (Budgeted) |
|
Red wool fabric (per yard) |
$9 |
$10 |
|
Black wool fabric (per yard) |
12 |
11 |
|
Knight logo patches (per patch) |
7 |
7 |
|
Raider Logo patches (per patch) |
6 |
8 |
|
|
26 |
27 |
Manufacturing overhead (both variable and fixed) is allocated to each blanket on the basis of budgeted direct manufacturing labor-hours per blanket. The budgeted variable manufacturing overhead rate for March 2013 is $16 per direct manufacturing labor-hour. The budgeted fixed manufacturing overhead for March 2013 is $14,640. Both variable and fixed manufacturing overhead costs are allocated to each unit of finished goods. Data relating to finished goods inventory for March 2013 are as follows:
|
|
Knights Blanket |
Raiders Blanket |
|
Beginning inventory in units |
12 |
17 |
|
Beginning inventory in dollars (cost) |
$1,440 |
$2,550 |
|
Target ending inventory in units |
22 |
27 |
Budgeted sales for March 2013 are 130 units of the Knights blankets and 190 units of the Raiders blankets. The budgeted selling prices per unit in March 2013 are $229 for the Knights blankets and $296 for the Raiders blankets. Assume the following in your answer:
|
• |
Work-in-process inventories are negligible and ignored. |
|
• |
Direct materials inventory and finished goods inventory are costed using the FIFO method. |
|
• |
Unit costs of direct materials purchased and finished goods are constant in March 2013. |
REQUIRED
|
1. Prepare the following budgets for March 2013: |
|
a. |
Direct manufacturing labor budget |
|
|
b. |
Manufacturing overhead budget |
|
|
c. |
Ending inventories budget (direct materials and finished goods) |
|
|
d. |
Cost of goods sold budget |
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