Question Content Area Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin Laghari Company makes and sells high-quality glare filters for microcomputer monitors. John Tanaka, controller, is responsible for preparing Laghari's master budget and has assembled the following data for the coming year. The direct labor rate includes wages, all employee-related benefits, and the employer's share of FICA. Labor saving machinery will be fully operational by March. Also, as of March 1, the company's union contract calls for an increase in direct labor wages that is included in the direct labor rate. Laghari expects to have 5,600 glare filters in inventory on December 31 of the current year, and has a policy of carrying 35 percent of the following month's projected sales in inventory. Information on the first four months of the coming year is as follows: January February March April Estimated unit sales 36,000 34,500 39,000 38,600 Sales price per unit $80 $80 $75 $75 Direct labor hours per unit 3.0 3.0 2.5 2.5 Direct labor hourly rate $18 $18 $20 $20 Direct materials cost per unit $9 $9 $9 $9 Required: Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit. 1. Prepare the following monthly budgets for Laghari Company for the first quarter of the coming year. Question Content Area a. Production budget in units: Laghari CompanyProduction Budget (units)For the First Quarter of the Coming Year January February March Total Unit sales Desired ending inventory Total units required Less: Beginning inventory Units produced Question Content Area b. Direct labor budget in hours: Round your answers to two decimal places, if required. Laghari CompanyDirect Labor Budget (hours)For the First Quarter of the Coming Year January February March Total Units produced Direct labor hours per unit Total labor budget (hours) Question Content Area c. Direct materials cost budget: Laghari CompanyDirect Materials Cost BudgetFor the First Quarter of the Coming Year January February March Total Units produced Cost per unit Total direct materials
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 Content Area
Production, Direct Labor, Direct Materials, Sales Budgets, Budgeted Contribution Margin
Laghari Company makes and sells high-quality glare filters for microcomputer monitors. John Tanaka, controller, is responsible for preparing Laghari's
| January | February | March | April | |
| Estimated unit sales | 36,000 | 34,500 | 39,000 | 38,600 |
| Sales price per unit | $80 | $80 | $75 | $75 |
| Direct labor hours per unit | 3.0 | 3.0 | 2.5 | 2.5 |
| Direct labor hourly rate | $18 | $18 | $20 | $20 |
| Direct materials cost per unit | $9 | $9 | $9 | $9 |
Required:
Unless otherwise indicated, round all calculated amounts to the nearest dollar or unit.
1. Prepare the following monthly budgets for Laghari Company for the first quarter of the coming year.
Question Content Area
a. Production budget in units:
| January | February | March | Total | |
|---|---|---|---|---|
| Unit sales | ||||
| Desired ending inventory | ||||
| Total units required | ||||
| Less: Beginning inventory | ||||
| Units produced |
Question Content Area
b. Direct labor budget in hours: Round your answers to two decimal places, if required.
| January | February | March | Total | |
|---|---|---|---|---|
| Units produced | ||||
| Direct labor hours per unit | ||||
| Total labor budget (hours) |
Question Content Area
c. Direct materials cost budget:
| January | February | March | Total | |
|---|---|---|---|---|
| Units produced | ||||
| Cost per unit | ||||
| Total direct materials |
Question Content Area
d. Sales budget: Round unit selling price amounts to the nearest cent and use the same for subsequent requirements.
| January | February | March | Total | |
|---|---|---|---|---|
| Unit sales | ||||
| Unit selling price | ||||
| Total sales revenue |
Question Content Area
2. Calculate the total budgeted contribution margin for Laghari Company by month and in total for the first quarter of the coming year. Enter all your answers as positive amounts. (CMA adapted)
| January | February | March | Total | |
|---|---|---|---|---|
| Sales revenue | ||||
| Direct labor cost | ||||
| Materials cost | ||||
| Contribution margin |
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