Prepare the production-overhead budget (in dollars) for 20x0. ### Vista Electronics, Incorporated: Production and Inventory DataVista Electronics, Incorporated, manufactures two different types of coils used in electric motors. In the fall of the current year, Erica Becker, the controller, compiled the following data.#### Sales Forecast for 20x0 (All Units to Be Shipped in 20x0):- **Product** - **Light Coil:** 58,000 units at $280 each - **Heavy Coil:** 38,000 units at $380 each#### Raw-Material Prices and Inventory Levels:- **Expected Inventories as of January 1, 20x0:** - Sheet Metal: 36,000 pounds - Copper Wire: 33,000 pounds - Platform: 5,800 units- **Desired Inventories by December 31, 20x0:** - Sheet Metal: 40,000 pounds - Copper Wire: 36,000 pounds - Platform: 6,800 units- **Anticipated Purchase Price:** - Sheet Metal: $15 per pound - Copper Wire: $8 per pound - Platform: $4 per unit#### Use of Raw Material:- **Amount Used per Unit:** - **Light Coil:** - Sheet Metal: 4 pounds - Copper Wire: 2 pounds - Platform: 2 units - **Heavy Coil:** - Sheet Metal: 5 pounds - Copper Wire: 3 pounds - Platform: 2 units#### Direct-Labor Requirements and Rates:- **Light Coil:** - Hours per Unit: 3 - Rate per Hour: $15- **Heavy Coil:** - Hours per Unit: 5 - Rate per Hour: $20#### Finished-Goods Inventories (in Units):- **Expected as of January 1, 20x0:** - Light Coil: 23,000 units - Heavy Coil: 9,500 units- **Desired by December 31, 20x0:** - Light Coil: 28,000 units - Heavy Coil: 10,500 unitsThis detailed breakdown provides an overview of the manufacturing and inventory requirements for Vista Electronics, aiding in efficient planning and resource allocation. **Finished-goods inventories (in units):**- **Product** - Expected January 1, 20x0 - Light coil: 23,000 - Heavy coil: 9,500 - Desired December 31, 20x0 - Light coil: 28,000 - Heavy coil: 10,500 **Production overhead:**| Overhead Cost Item | Activity-Based Budget Rate ||------------------------------------------|-------------------------------------------------|| Purchasing and material handling | $0.80 per pound of sheet metal and copper wire purchased || Depreciation, utilities, and inspection | $7.00 per coil produced (either type) || Shipping | $2.00 per coil shipped (either type) || General production overhead | $5.00 per direct-labor hour |This table outlines the expected and desired finished goods inventory for light and heavy coils, along with the production overhead costs calculated on an activity-based budget rate.

It is the process of undertaking plans to spend money. This plan enables the business in advance to…

Vista Electronics, Incorporated, manufactures two different types of coils used in electric motors. In the fall of the current year, Erica Becker, the controller, compiled the following data. • Sales forecast for 20x0 (all units to be shipped in 20x0): Product Light coil Heavy coil Units 58,000 38,000 Price $ 280 380

Vista Electronics, Incorporated, manufactures two different types of coils used in electric motors. In the fall of the current year, Erica Becker, the controller, compiled the following data. • Sales forecast for 20x0 (all units to be shipped in 20x0): Product Light coil Heavy coil Units 58,000 38,000 Price $ 280 380

FINANCIAL ACCOUNTING

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ISBN:9781259964947

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Chapter1: Financial Statements And Business Decisions

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Concept explainers

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.

Question

Prepare the production-overhead budget (in dollars) for 20x0.

### Vista Electronics, Incorporated: Production and Inventory Data

Vista Electronics, Incorporated, manufactures two different types of coils used in electric motors. In the fall of the current year, Erica Becker, the controller, compiled the following data.

#### Sales Forecast for 20x0 (All Units to Be Shipped in 20x0):
- **Product**
- **Light Coil:** 58,000 units at $280 each
- **Heavy Coil:** 38,000 units at $380 each

#### Raw-Material Prices and Inventory Levels:
- **Expected Inventories as of January 1, 20x0:**
- Sheet Metal: 36,000 pounds
- Copper Wire: 33,000 pounds
- Platform: 5,800 units

- **Desired Inventories by December 31, 20x0:**
- Sheet Metal: 40,000 pounds
- Copper Wire: 36,000 pounds
- Platform: 6,800 units

- **Anticipated Purchase Price:**
- Sheet Metal: $15 per pound
- Copper Wire: $8 per pound
- Platform: $4 per unit

#### Use of Raw Material:
- **Amount Used per Unit:**
- **Light Coil:**
- Sheet Metal: 4 pounds
- Copper Wire: 2 pounds
- Platform: 2 units
- **Heavy Coil:**
- Sheet Metal: 5 pounds
- Copper Wire: 3 pounds
- Platform: 2 units

#### Direct-Labor Requirements and Rates:
- **Light Coil:**
- Hours per Unit: 3
- Rate per Hour: $15

- **Heavy Coil:**
- Hours per Unit: 5
- Rate per Hour: $20

#### Finished-Goods Inventories (in Units):
- **Expected as of January 1, 20x0:**
- Light Coil: 23,000 units
- Heavy Coil: 9,500 units

- **Desired by December 31, 20x0:**
- Light Coil: 28,000 units
- Heavy Coil: 10,500 units

This detailed breakdown provides an overview of the manufacturing and inventory requirements for Vista Electronics, aiding in efficient planning and resource allocation.

**Finished-goods inventories (in units):**

- **Product**
- Expected January 1, 20x0
- Light coil: 23,000
- Heavy coil: 9,500
- Desired December 31, 20x0
- Light coil: 28,000
- Heavy coil: 10,500

**Production overhead:**

| Overhead Cost Item | Activity-Based Budget Rate |
|------------------------------------------|-------------------------------------------------|
| Purchasing and material handling | $0.80 per pound of sheet metal and copper wire purchased |
| Depreciation, utilities, and inspection | $7.00 per coil produced (either type) |
| Shipping | $2.00 per coil shipped (either type) |
| General production overhead | $5.00 per direct-labor hour |

This table outlines the expected and desired finished goods inventory for light and heavy coils, along with the production overhead costs calculated on an activity-based budget rate.

Definition Definition Indirect costs incurred while producing goods or services. Overhead costs cannot be directly attributed to products or services. Overhead includes indirect material cost, indirect labor cost, rent, utilities expenses, and depreciation. Since these costs directly affect the profitability of a company, managing overhead becomes an important task for management.

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