Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows. Manufacturing costs (per unit based on expected activity of 31,000 units or 52,700 direct labor hours): Direct materials (2.5 pounds at $18) $ 45.00 Direct labor (1.7 hours at $70) 119.00 Variable overhead (1.7 hours at $20) 34.00 Fixed overhead (1.7 hours at $30) 51.00 Standard cost per unit $ 249.00 Budgeted selling and administrative costs: Variable $ 8 per unit Fixed $ 1,600,000 Expected sales activity: 27,000 units at $380 per unit Desired ending inventories: 18% of sales Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity. Units produced 30,000 Units sold 28,500 Unit selling price $ 375 Direct labor hours worked 50,500 Direct labor costs $ 3,585,500 Direct materials purchased 79,000 pounds Direct materials costs $ 1,422,000 Direct materials used 79,000 pounds Actual fixed overhead $ 1,300,000 Actual variable overhead $ 954,000 Actual selling and administrative costs $ 1,916,000 In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold. Required: a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

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Utease Corporation has several production plants nationwide. A newly opened plant in Dubuque produces and sells one product. The plant is treated, for responsibility accounting purposes, as a profit center. The unit standard costs for a production unit, with overhead applied based on direct labor hours, are as follows.

Manufacturing costs (per unit based on expected activity of 31,000 units or 52,700 direct labor hours):


Direct materials (2.5 pounds at $18)	$	45.00
Direct labor (1.7 hours at $70)		119.00
Variable overhead (1.7 hours at $20)		34.00
Fixed overhead (1.7 hours at $30)		51.00
Standard cost per unit	$	249.00
Budgeted selling and administrative costs:
Variable	$	8	per unit
Fixed	$	1,600,000

Expected sales activity: 27,000 units at $380 per unit

Desired ending inventories: 18% of sales

Assume this is the first year of operations for the Dubuque plant. During the year, the company had the following activity.


Units produced		30,000
Units sold		28,500
Unit selling price	$	375
Direct labor hours worked		50,500
Direct labor costs	$	3,585,500
Direct materials purchased		79,000	pounds
Direct materials costs	$	1,422,000
Direct materials used		79,000	pounds
Actual fixed overhead	$	1,300,000
Actual variable overhead	$	954,000
Actual selling and administrative costs	$	1,916,000

In addition, all over- or underapplied overhead and all product cost variances are adjusted to cost of goods sold.

Required:

a. Prepare a production budget for the coming year based on the available standards, expected sales, and desired ending inventories.

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