Managerial Accounting
15th Edition
ISBN: 9781337912020
Author: Carl Warren, Ph.d. Cma William B. Tayler
Publisher: South-Western College Pub
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Question
Chapter 8, Problem 13E
(A)
To determine
Prepare the production budget and direct labor cost budget of Company L.
(A)
Expert Solution
Explanation of Solution
The following table shows the production budget for D and 501 J.
| Company L | ||
| Production Budget | ||
| For the Month Ending May 31 | ||
| Particulars | Units | |
| D | 501 J | |
| Expected units to be sold | 23,600 | 53,100 |
| Add: Desired inventory, June 30 | 420 | 1,860 |
| Total Units Required | 24,020 | 54,960 |
| Less: Estimated Inventory, June 1 | (670) | (1,660) |
| Total Units To Be Produced | 23,350 | 53,300 |
Table (1)
Conclusion
Therefore, the total units to be produced for “D” and 501 “J” are 23,350 and 53,300 respectively.
(B)
To determine
Prepare the direct labor cost budget of Company L.
(B)
Expert Solution
Explanation of Solution
The following table shows the direct labor cost budget for inseam, outer-seam, pockets, and zipper.
| Company L | ||||
| Direct Labor Cost Budget | ||||
| For the Month Ending May 31 | ||||
| Particulars | Inseam | Outer-seam | Pockets | Zipper |
| Minutes Required For Production: | ||||
| D | 42,030 (1) | 46,700 (2) | 14,010 (3) | 28,020 (4) |
| 501 J | 47,970 (5) | 74,620 (6) | 47,970 (7) | 31,980 (8) |
| Total Minutes (A) | 90,000 | 121,320 | 61,980 | 60,000 |
| Total Hours Required (B) = (A)/60 | 1,500 | 2,022 | 1,033 | 1,000 |
| Hourly Rate (C) | $13 | $13 | $15 | $15 |
| Total (B) × (C) | $19,500 | $26,286 | $15,495 | $15,000 |
| Total Direct Labor Cost | 76,281 | |||
Table (1)
Working Notes:
(1) Calculate the minutes required for the production of D in inseam.
(2) Calculate the minutes required for the production of D in outer-seam.
(3) Calculate the minutes required for the production of D in pockets.
(4) Calculate the minutes required for the production of D in zipper.
(5) Calculate the minutes required for the production of 501 J in inseam.
(6) Calculate the minutes required for the production of 501 J in outer-seam.
(7) Calculate the minutes required for the production of 501 J in pockets.
(8) Calculate the minutes required for the production of 501 J in zipper.
Therefore, the total direct labor cost is $76,281.
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Chapter 8 Solutions
Managerial Accounting
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