Scottsdale Styles Inc.’s budgeted unit sales for the year 2016 were: Tables ......................................................... 30,000 Chairs.......................................................... 120,000 The budgeted selling price for tables was $175 per table, and it was $75 per chair. The beginning finished goods inventories were expected to be 1,000 tables and 4,000 chairs, for a total cost of $240,000, with desired ending inventories at 1,500 and 6,000, respectively, with a total cost of $360,000. There was no anticipated beginning or ending work-in-process inventory for either item. The standard materials quantities for each item were as follows: Table Chair Rattan ............................................... 10yd 6yd Binding cane ................................ 6 yd 3 yd The purchase prices of rattan and binding cane were $5 and $3 per yard, respectively. The desired ending inventories for rattan and binding cane were 51,000 and 25,500 yards, respectively. The estimated beginning inventories for rattan and binding cane were 34,000 and 17,000 yards, respectively. The direct labor hours required for each type of item were as follows: Assembly Department Finishing Department Table................................................ 0.50 0.25 Chair................................................ 0.25 0.10 The direct labor rate for each department is as follows: Assembly Department ........................................................... $15perhour Finishing Department............................................................ $13per hour Budgeted factory overhead costs for 2016 were as follows: Indirect materials..................................................................$ 98,500 Indirect labor ..........................................................................$132,200 Depreciation of building and equipment ...................$57,500 Power and light .....................................................................$92,200 Total........................................................................................... $380,400 Required: Prepare each of the following budgets for Scottsdale Styles for the year ended December 31, 2016: 1. Direct labor budget. 2. Factory overhead budget. 3. Cost of goods sold 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.
Scottsdale Styles Inc.’s budgeted unit sales for the year 2016 were:
Tables ......................................................... 30,000
Chairs.......................................................... 120,000
The budgeted selling price for tables was $175 per table, and it was $75 per chair. The beginning finished goods inventories were expected to be 1,000 tables and 4,000 chairs, for a total cost of $240,000, with desired ending inventories at 1,500 and 6,000, respectively, with a total cost of $360,000. There was no anticipated beginning or ending work-in-process inventory for either item. The standard materials quantities for each item were as follows:
Table Chair
Rattan ............................................... 10yd 6yd
Binding cane ................................ 6 yd 3 yd
The purchase prices of rattan and binding cane were $5 and $3 per yard, respectively. The desired ending inventories for rattan and binding cane were 51,000 and 25,500 yards, respectively. The estimated beginning inventories for rattan and binding cane were 34,000 and 17,000 yards, respectively. The direct labor hours required for each type of item were as follows:
Assembly Department Finishing Department
Table................................................ 0.50 0.25
Chair................................................ 0.25 0.10
The direct labor rate for each department is as follows:
Assembly Department ........................................................... $15perhour
Finishing Department............................................................ $13per hour
Budgeted
Indirect materials..................................................................$ 98,500
Indirect labor ..........................................................................$132,200
Power and light .....................................................................$92,200
Total........................................................................................... $380,400
Required:
Prepare each of the following budgets for Scottsdale Styles for the year ended December 31, 2016:
1. Direct labor budget.
2. Factory overhead budget.
3. Cost of goods sold budget.
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