otal utilities, 80% relates to the manufacturing facilities & 20% relates to the office area. a)What was the amount of direct materials used in production? b)What was the amount of manufacturing overhead costs? c)What is the prime cost and conversion cost of the product?
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.
Bubba Manufacturing Company provided the following information for the fiscal year to June 30, 2020:
|
Inventories |
01/07/2019 |
30/06/2020 |
|
Direct Materials |
$72,000 |
$65,000 |
|
Work-in-Process |
107,000 |
128,000 |
|
Finished Goods |
149,500 |
141,700 |
Other information:
|
Office cleaner’s wages |
4,500 |
|
Sales Revenue |
1,031,000 |
|
Raw materials purchased |
235,000 |
|
Factory wages |
239,700 |
|
Indirect materials |
23,500 |
|
Delivery truck driver’s wages |
15,400 |
|
Indirect labor |
9,500 |
|
|
32,000 |
|
Insurance 1 |
60,000 |
|
Depreciation on delivery truck |
7,250 |
|
Utilities 2 |
118,750 |
|
Administrative salaries |
41,250 |
|
Special Design Costs |
5,000 |
|
Selling expenses |
9,000 |
|
Sales Commission |
2% of gross profit |
1 Of the total insurance, 66⅔% relates to the factory facilities & 33⅓% relates to general
& administrative costs.
2 Of the total utilities, 80% relates to the manufacturing facilities & 20% relates to the office area.
a)What was the amount of direct materials used in production?
b)What was the amount of
c)What is the prime cost and conversion cost of the product?
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