Sales, production, direct materials, direct labor, and fac- tory overhead budgets LO2 YOTO Tire Company Yoto Tire Company's budgeted unit sales for the year 2011 were: Passenger car tires .... 60,000 Truck tires 12,500 The budgeted selling price for truck tires was $300 per tire, and that for passenger car tires .was $90 per tire. The beginning finished. goods inventories were expected to be 2,500 truck tires and 6,000 passenger tires, for a total cost of $400,510, with desired ending inventories at 2,000 and 5,000, respectively, and 'a total cost of $326,478. There was no anticipated beginning or ending work in process inventory for either type of tire. The standard materials quantities for each type of tire were as follows: Passenger Car Truck Rubber 35 Ib 15 Ib 4.5 lb 2.0 Ib Steel belts The purchase prices of rubber and steel were $3 and $2 per pound, respectively. The desired ending inventories for rubber and steel were 60,000 and 6,000 pounds, respectively. The estimated beginning tively. The direct labor hours required for each type of tire were as follows: Finishing inventories for rubber and steel were 75,000 and 7,500 pounds, respec- Molding Department Department 0.10 0.20 Truck tire.... 0.10 0.05 Passenger car tire....... The direct labor rate for each department is as follows: $13 per hour Molding Department... Finishing Department .. $15 per hour Budgeted factory overhead costs for 2011 were as follows: $170,560 Indirect materials. 158,800 98,320 Indirect labor... Depreciation of building and equipment 126,000 Power and light $553,680 Total Required: Prepare each of the following budgets for Yoto for the year ended 2011: 1. Sales budget 2. Production budget 3. Direct material budget
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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