Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the followingmanufacturing costs: Direct materials $1.67Direct labor 0.56Variable overhead 0.72Fixed overhead 1.80Total unit cost $4.75 For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000of them. Budgeted beginning inventory in units is 16,000 with unit cost of $4.75. (There are no beginning or ending inventories of work in process.)Required:1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year. 2. What if sales increased to 290,000 discs? How would that affect the ending finished goods in-ventory budget? Calculate the value of budgeted ending finished goods inventory.
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.
Play-Disc makes Frisbee-type plastic discs. Each 12-inch diameter plastic disc has the following
manufacturing costs:
Direct materials $1.67
Direct labor 0.56
Variable overhead 0.72
Fixed overhead 1.80
Total unit cost $4.75
For the coming year, Play-Disc expects to make 300,000 plastic discs, and to sell 285,000
of them. Budgeted beginning inventory in units is 16,000 with unit cost of $4.75. (There are no beginning or ending inventories of work in process.)
Required:
1. Prepare an ending finished goods inventory budget for Play-Disc for the coming year.
2. What if sales increased to 290,000 discs? How would that affect the ending finished goods in-
ventory budget? Calculate the value of budgeted ending finished goods inventory.
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