Production and direct labor cost budgetsLevi Strauss & Co. manufactures slacks and jeans under a variety ofbrand names, such as Dockers and 501 Jeans. Slacks and jeans areassembled by a variety of different sewing operations. Assume that thesales budget for Dockers and 501 Jeans shows estimated sales of 23,600and 53,100 pairs, respectively, for May. The finished goods inventory isassumed as follows: Dockers 501 Jeans May 1 estimated inventory May 31 desired inventory 670 420 1660 1860 Assume the following direct labor data per 10 pairs of Dockers and 501Jeans for four different sewing operations: Direct Labor per 10 Pairs Dockers 501 Jeans Inseam 18 minutes 9 minutes Outerseam 20 14 Pockets 6 9 Zipper 12 6 Total 56 minutes 38 minutes a. Prepare a production budget for May. Prepare the budget in twocolumns: Dockers and 501 Jeans . b. Prepare the May direct labor cost budget for the four sewingoperations, assuming a $13 wage per hour for the inseam andouterseam sewing operations and a $15 wage per hour for thepocket and zipper sewing operations. Prepare the direct labor costbudget in four columns: inseam, outerseam, pockets, and zipper.
Variance Analysis
In layman's terms, variance analysis is an analysis of a difference between planned and actual behavior. Variance analysis is mainly used by the companies to maintain a control over a business. After analyzing differences, companies find the reasons for the variance so that the necessary steps should be taken to correct that variance.
Standard Costing
The standard cost system is the expected cost per unit product manufactured and it helps in estimating the deviations and controlling them as well as fixing the selling price of the product. For example, it helps to plan the cost for the coming year on the various expenses.
Production and direct labor cost budgets
Levi Strauss & Co. manufactures slacks and jeans under a variety of
brand names, such as Dockers and 501 Jeans. Slacks and jeans are
assembled by a variety of different sewing operations. Assume that the
sales budget for Dockers and 501 Jeans shows estimated sales of 23,600
and 53,100 pairs, respectively, for May. The finished goods inventory is
assumed as follows:
| Dockers | 501 Jeans | |
|
May 1 estimated inventory May 31 desired inventory |
670 420 |
1660 1860 |
Assume the following direct labor data per 10 pairs of Dockers and 501
Jeans for four different sewing operations:
| Direct Labor per 10 Pairs | ||
| Dockers | 501 Jeans | |
| Inseam | 18 minutes | 9 minutes |
| Outerseam | 20 | 14 |
| Pockets | 6 | 9 |
| Zipper | 12 | 6 |
| Total | 56 minutes | 38 minutes |
a. Prepare a production budget for May. Prepare the budget in two
columns: Dockers and 501 Jeans .
b. Prepare the May direct labor cost budget for the four sewing
operations, assuming a $13 wage per hour for the inseam and
outerseam sewing operations and a $15 wage per hour for the
pocket and zipper sewing operations. Prepare the direct labor cost
budget in four columns: inseam, outerseam, pockets, and zipper.
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