2017 Projected Sales Product Units Price Thingone Thingtwo 69,000 $160 44,000 $258 2017 Inventories in Units Expected Target Product January 1, 2017 December 31, 2017 Thingone Thingtwo 29,000 8,000 24,000 7,000 The following direct materials are used in the two products: Amount Used per Unit Direct Material Unit Thingone Thingtwo A pound pound 6 5 each 3 Projected data for 2017 for direct materials are: Expected Inventories January 1, 2017 Target Inventories December 31, 2017 Direct Material Anticipated Purchase Price $13 36,000 lb. 38,000 lb. B 8 31,000 lb. 34,000 Ib. 9,000 units 12,000 units Projected direct manufacturing labor requirements and rates for 2017 are: Product Hours per Unit Rate per Hour Thingone Thingtwo 4 $13 5 18 Manufacturing overhead is allocated at the rate of $24 per direct manufacturing labor-hour. Required Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the fol- lowing budgets for 2017: 1. Revenues budget (in dollars) 2. What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly. 3. Production budget (in units) 4. Direct material purchases budget (in quantities) 5. Direct material purchases budget (in dollars) 6. Direct manufacturing labor budget (in dollars) 7. Budgeted finished-goods inventory at December 31, 2017 (in dollars) 8. What questions might the CEO ask the production manager when reviewing the production, direct materials, and direct manufacturing labor budgets? 9. How does preparing a budget help Chen Corporation's top management better manage the company?
2017 Projected Sales Product Units Price Thingone Thingtwo 69,000 $160 44,000 $258 2017 Inventories in Units Expected Target Product January 1, 2017 December 31, 2017 Thingone Thingtwo 29,000 8,000 24,000 7,000 The following direct materials are used in the two products: Amount Used per Unit Direct Material Unit Thingone Thingtwo A pound pound 6 5 each 3 Projected data for 2017 for direct materials are: Expected Inventories January 1, 2017 Target Inventories December 31, 2017 Direct Material Anticipated Purchase Price $13 36,000 lb. 38,000 lb. B 8 31,000 lb. 34,000 Ib. 9,000 units 12,000 units Projected direct manufacturing labor requirements and rates for 2017 are: Product Hours per Unit Rate per Hour Thingone Thingtwo 4 $13 5 18 Manufacturing overhead is allocated at the rate of $24 per direct manufacturing labor-hour. Required Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the fol- lowing budgets for 2017: 1. Revenues budget (in dollars) 2. What questions might the CEO ask the marketing manager when reviewing the revenues budget? Explain briefly. 3. Production budget (in units) 4. Direct material purchases budget (in quantities) 5. Direct material purchases budget (in dollars) 6. Direct manufacturing labor budget (in dollars) 7. Budgeted finished-goods inventory at December 31, 2017 (in dollars) 8. What questions might the CEO ask the production manager when reviewing the production, direct materials, and direct manufacturing labor budgets? 9. How does preparing a budget help Chen Corporation's top management better manage the company?
Chapter2: Building Blocks Of Managerial Accounting
Section: Chapter Questions
Problem 5PA: Wachowski Company reported these cost data for the year 2017. Use the data to complete the following...
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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
100%
Revenue and production budgets. (CPA, adapted) The Chen Corporation manufactures and sells two products: Thingone and Thingtwo. In July 2016, Chen’s budget department gathered the following data to prepare budgets for 2017:
Transcribed Image Text:2017 Projected Sales
Product
Units
Price
Thingone
Thingtwo
69,000
$160
44,000
$258
2017 Inventories in Units
Expected Target
Product
January 1, 2017
December 31, 2017
Thingone
Thingtwo
29,000
8,000
24,000
7,000
The following direct materials are used in the two products:
Amount Used per Unit
Direct Material
Unit
Thingone
Thingtwo
A
pound
pound
6
5
each
3
Transcribed Image Text:Projected data for 2017 for direct materials are:
Expected Inventories
January 1, 2017
Target Inventories
December 31, 2017
Direct Material Anticipated Purchase Price
$13
36,000 lb.
38,000 lb.
B
8
31,000 lb.
34,000 Ib.
9,000 units
12,000 units
Projected direct manufacturing labor requirements and rates for 2017 are:
Product
Hours per Unit
Rate per Hour
Thingone
Thingtwo
4
$13
5
18
Manufacturing overhead is allocated at the rate of $24 per direct manufacturing labor-hour.
Required
Based on the preceding projections and budget requirements for Thingone and Thingtwo, prepare the fol-
lowing budgets for 2017:
1. Revenues budget (in dollars)
2. What questions might the CEO ask the marketing manager when reviewing the revenues budget?
Explain briefly.
3. Production budget (in units)
4. Direct material purchases budget (in quantities)
5. Direct material purchases budget (in dollars)
6. Direct manufacturing labor budget (in dollars)
7. Budgeted finished-goods inventory at December 31, 2017 (in dollars)
8. What questions might the CEO ask the production manager when reviewing the production, direct
materials, and direct manufacturing labor budgets?
9. How does preparing a budget help Chen Corporation's top management better manage the company?
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