Production and Direct Labor Cost Budgets Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 21,610 and 41,710 pairs, respectively, for May. The finished goods inventory is assumed as follows: Kickers 101 Denims May 1 estimated inventory 970 1,180 May 31 desired inventory 360 1,470 Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations: Direct Labor per 10 Pairs Kickers 101 Denims Inseam 16 minutes 11 minutes Outerseam 19 14 Pockets 6 8 Zipper 10 6 Total 51 minutes 39 minutes a. Prepare a production budget for May. Two-Leg Company Production Budget May (assumed data) Kickers 101 Denims Expected units to be sold Total units Total units to be produced 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 $18 wage per hour for the pocket and zipper sewing operations. Two-Leg Company Direct Labor Cost Budget May (assumed data) Inseam Outerseam Pockets Zipper Total Kickers 101 Denims Total minutes Total direct labor hours Direct labor rate x $ x $ x $ x $ Total direct labor cost $ $ $ $ $
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.
Production and Direct Labor Cost Budgets
Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 21,610 and 41,710 pairs, respectively, for May. The finished goods inventory is assumed as follows:
| Kickers | 101 Denims | |||
| May 1 estimated inventory | 970 | 1,180 | ||
| May 31 desired inventory | 360 | 1,470 |
Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations:
| Direct Labor per 10 Pairs | ||||
| Kickers | 101 Denims | |||
| Inseam | 16 | minutes | 11 | minutes |
| Outerseam | 19 | 14 | ||
| Pockets | 6 | 8 | ||
| Zipper | 10 | 6 | ||
| Total | 51 | minutes | 39 | minutes |
a. Prepare a production budget for May.
| Two-Leg Company | ||
| Production Budget | ||
| May (assumed data) | ||
| Kickers | 101 Denims | |
| Expected units to be sold | ||
| Total units | ||
| Total units to be produced |
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 $18 wage per hour for the pocket and zipper sewing operations.
| Two-Leg Company | |||||
| Direct Labor Cost Budget | |||||
| May (assumed data) | |||||
| Inseam | Outerseam | Pockets | Zipper | Total | |
| Kickers | |||||
| 101 Denims | |||||
| Total minutes | |||||
| Total direct labor hours | |||||
| Direct labor rate | x $ | x $ | x $ | x $ | |
| Total direct labor cost | $ | $ | $ | $ | $ |
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