Required information Ramos Co. provides the following sales forecast and production budget for the next four months: Sales (units) Budgeted production (units) April 590 530 May 670 660 June 620 630 July 690 630 The company plans for finished goods inventory of 210 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 30% of next month's production needs. Beginning direct materials inventory for April was 795 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.50 hours of direct labor at the rate of $20 per hour. The company budgets variable overhead at the rate of $24 per direct labor hour and budgets fixed overhead of $8,900 per month.
Required information Ramos Co. provides the following sales forecast and production budget for the next four months: Sales (units) Budgeted production (units) April 590 530 May 670 660 June 620 630 July 690 630 The company plans for finished goods inventory of 210 units at the end of June. In addition, each finished unit requires 5 pounds of direct materials and the company wants to end each month with direct materials inventory equal to 30% of next month's production needs. Beginning direct materials inventory for April was 795 pounds. Direct materials cost $2 per pound. Each finished unit requires 0.50 hours of direct labor at the rate of $20 per hour. The company budgets variable overhead at the rate of $24 per direct labor hour and budgets fixed overhead of $8,900 per month.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
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Transcribed Image Text:Required information
Ramos Co. provides the following sales forecast and production budget for the next
four months:
Sales (units)
Budgeted production (units)
April
590
530
May
670
660
June
620
630
July
690
630
The company plans for finished goods inventory of 210 units at the end of June. In
addition, each finished unit requires 5 pounds of direct materials and the company
wants to end each month with direct materials inventory equal to 30% of next
month's production needs. Beginning direct materials inventory for April was 795
pounds. Direct materials cost $2 per pound. Each finished unit requires 0.50 hours
of direct labor at the rate of $20 per hour. The company budgets variable overhead
at the rate of $24 per direct labor hour and budgets fixed overhead of $8,900 per
month.
Transcribed Image Text:1. Prepare a direct labor budget.
2. Prepare a factory overhead budget for April, May, and June.
Complete this question by entering your answers in the tabs below.
Required 1 Required 2
Prepare a direct labor budget. (Enter your direct labor hours (hrs.) per unit in two decimal places.)
Budgeted production (units)
Total labor hours needed
Budgeted direct labor cost.
Total labor hours needed
RAMOS CO.
Direct Labor Budget
For April, May, and June
April
May
Budgeted variable overhead
Budgeted fixed overhead
Total budgeted factory overhead
530
Prepare a factory overhead budget for April, May, and June.
RAMOS CO.
Factory Overhead Budget
For April, May, and June
April
660
< Required 1
June
May
630 units
June
Required 2 >
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