Production and Direct Labor Cost Budgets Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 27,780 and 59,580 pairs, respectively, for May. The finished goods inventory is assumed as follows: Kickers 101 Denims May 1 estimated inventory 1,240 1,680 May 31 desired inventory 460 2,100 Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations: Direct Labor per 10 Pairs Kickers 101 Denims Inseam 20 minutes 14 minutes Outerseam 24 17 Pockets 8 10 Zipper 11 7 Total 63 minutes 48 minutes a. Prepare a production budget for May. Two-Leg CompanyProduction BudgetMay (assumed data) Kickers 101 Denims Expected units to be sold fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank Total units fill in the blank fill in the blank fill in the blank fill in the blank fill in the blank Total units to be produced fill in the blank fill in the blank b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $13 wage per hour for the inseam and outerseam sewing operations and a $17 wage per hour for the pocket and zipper sewing operations. Two-Leg CompanyDirect Labor Cost BudgetMay (assumed data) Inseam Outerseam Pockets Zipper Total Hours required for production: Kickers fill in the blank fill in the blank fill in the blank fill in the blank 101 Denims fill in the blank fill in the blank fill in the blank fill in the blank Total minutes fill in the blank fill in the blank fill in the blank fill in the blank Convert minutes to hours fill in the blank fill in the blank fill in the blank fill in the blank Hourly rate x $fill in the blank x $fill in the blank x $fill in the blank x $fill in the blank Total direct labor cost $fill in the blank $fill in the blank $fill in the blank $fill in the blank $fill in the blank
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.
Production and Direct Labor Cost Budgets
Two-Leg Company manufactures slacks and jeans under a variety of brand names, such as Kickers and 101 Denims. Slacks and jeans are assembled by a variety of different sewing operations. Assume that the sales budget for Kickers and 101 Denims shows estimated sales of 27,780 and 59,580 pairs, respectively, for May. The finished goods inventory is assumed as follows:
| Kickers | 101 Denims | |||
| May 1 estimated inventory | 1,240 | 1,680 | ||
| May 31 desired inventory | 460 | 2,100 |
Assume the following direct labor data per 10 pairs of Kickers and 101 Denims for four different sewing operations:
| Direct Labor per 10 Pairs | ||||
| Kickers | 101 Denims | |||
| Inseam | 20 | minutes | 14 | minutes |
| Outerseam | 24 | 17 | ||
| Pockets | 8 | 10 | ||
| Zipper | 11 | 7 | ||
| Total | 63 | minutes | 48 | minutes |
a. Prepare a production budget for May.
| Kickers | 101 Denims | |
| Expected units to be sold | fill in the blank | fill in the blank |
|
fill in the blank
|
fill in the blank | fill in the blank |
| Total units | fill in the blank | fill in the blank |
|
fill in the blank
|
fill in the blank | fill in the blank |
| Total units to be produced | fill in the blank | fill in the blank |
b. Prepare the May direct labor cost budget for the four sewing operations, assuming a $13 wage per hour for the inseam and outerseam sewing operations and a $17 wage per hour for the pocket and zipper sewing operations.
| Inseam | Outerseam | Pockets | Zipper | Total | |
| Hours required for production: | |||||
| Kickers | fill in the blank | fill in the blank | fill in the blank | fill in the blank | |
| 101 Denims | fill in the blank | fill in the blank | fill in the blank | fill in the blank | |
| Total minutes | fill in the blank | fill in the blank | fill in the blank | fill in the blank | |
| Convert minutes to hours | fill in the blank | fill in the blank | fill in the blank | fill in the blank | |
| Hourly rate | x $fill in the blank | x $fill in the blank | x $fill in the blank | x $fill in the blank | |
| Total direct labor cost | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank | $fill in the blank |
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